China Stocks Fulfill Early-Dec. Cycle Low; Multi-Month Bottom Likely.
12/11/19 Weekly Re-Lay Alert: “On a related basis, much of the market’s current action is closely linked to vacillating expectations regarding the US/China Trade War and the Dec. 15 deadline for new/increasing tariffs from the U.S. Much speculation is that some form of last-minute deal will be struck to at least delay the implementation of this latest round of tariffs.
While the US market has remained strong throughout much of this battle, the Chinese equity market has not. That has focused on one time frame…
The Nov. ’19 & Dec. ’19 INSIIDE Tracks explained why multi-month cycles projected the Shanghai Composite to remain under (negative) pressure into early-Dec. ’19 – when a bottom should take hold.
It had a similar 2-month/60-degree cycle and an over-arching ~11.5 month cycle (acting as a type of fractal relationship) – both projecting a continuation of selling from Nov. 5 into the opening days of Dec. ’19 – at which time a multi-week (and potentially multi-month) bottom was likely.
“10/31/19 – China’s Shanghai Composite did set a 2 – 4 week low on Oct. 4 – 8 – perpetuating a ~60-degree cycle that could produce a subsequent low in early-Dec. That time frame holds significance from multiple perspectives…
A drop into the first half of Dec. ‘19 would fulfill a ~4-month/17 – 18 week high (early-April) – low (early-Aug.) – low (early-Dec. ‘19) Cycle Progression.
It would also fulfill a higher-magnitude, but very similar (fractal-like) ~11.5-month high (mid-Jan. ‘18) – low (late-Dec. ‘18) – low (early-Dec. ‘19) Cycle Progression.
From a price/time perspective, the Shanghai Comp is trading inside its ascending weekly 21 MAC, having just rallied back to the high of that channel and quickly selling off. However, beginning on Nov. 4 – and lasting for four weeks – the inversely-correlated weekly 21 MARC will surge.
Considering that calculator’s proximity to current price action, it could quickly become a negative influence and help turn the direction of the corresponding weekly 21 MAC down. That negative pressure should increase into early-Dec. ‘19!”
The Shanghai Composite did begin a new decline on Nov. 5 – in perfect sync with its weekly 21 MARC – and did drop into early-Dec., when it set its latest low. It then quickly turned its daily and intra-month trends up as its weekly 21 MARC began a multi-week plunge – supporting the inversely-correlated weekly 21 MAC.
If there was some ‘good’ news in the trade battle, what index would likely benefit the most?
Probably the one that has been pressured the most by this ongoing trade war – Chinese stocks.
Have cycles been revealing what (and when) to expect for the past six weeks?
The next few days should reveal the answer to that question.”
Chinese & Hong Kong stock cycles projected a multi-month bottom in the first half of Dec. ’19… which appears to be taking hold. That coincided with a quick, sharp sell-off in domestic indexes in early-Dec. – repeating a pattern seen in early-June, early-Aug, & early-Oct. ’19. That intensifies the focus on early-Feb. ’20.
Could Chinese Stocks Be Setting Multi-Month Bottom?
Refer to latest Weekly Re-Lay & INSIIDE Track publications for additional details and/or related trading strategies.