We’ve been watching Chinese stocks very closely for almost a year now, because the last time the markets all tanked, China led the way.
Since retracing a standard fare Fibonacci amount of their previous losses, Chinese stocks actually put in a top last August, and since have been making an ominous set of “lower highs” – a traditional bearish indicator.
The Chinese stock market rally has stalled. (Chart courtesy of StockCharts.com)
Legendary trader Dennis Gartman commented a few months ago that he was concerned that stocks markets around the world had rallied furiously back to “the box”, then stalled – with “the box” being the aforementioned usual 38-62% retracement of previous losses.
(I’ve never heard a suitable explanation as to why this always happens, other than “it just does”. Which is fair I guess, because it usually does happen.)
It sure looks ominous across the Pacific right now.
You may also enjoy: More reasons the Chinese bubble is bursting.
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