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    Shanghai Index Bowtie Pattern

    By Stock Charts | April 22, 2007




    goldenpig.jpg

    While doing a bit more research on the Chinese markets, I came across this analysis of the Shanghai Index over at Stocktiming.com. (original link from TheKirkReport.com) Based on their technical analysis, it looks like Friday’s fall of 4.25% is preempting a bowtie pattern should take the index back down to support at ~6568. Where it heads after that is anybody’s guess, but an article over at SafeHaven.com suggests an imminent China crash.

    The article talks about the current stock market mania in China, where the Shanghai index has had a “11.5% average weekly rise over a 6.5 month period” and an estimated 90% of loans are being invested into the stock market. This meteoric rise rivals the the parabolic ascent of the dot com bubble; undoubtedly a fun ride, but obviously unsustainable in the long run.

    Part of the rise can be attributed to 2007 being the “Year of the Golden Pig,” which occurs only once every 600 years and supposedly brings double the luck and double the prosperity. Indeed, 2007 has been quite a year for investors in Chinese markets, but when the party’s over it’s going to be one hell of a hangover.

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