China's Parabolic Move Stalling?

Friday, July 31, 2009


The Shanghai Composite Index has experienced a massive parabolic run since November of 2008. The enthusiasm has been unbelievable with the Index reaching a high this week 107% over the October low.  In just 8 months the Index doubled in value yet, at 3,266 it remains a long way off its all-time high 6,124 hit in October of 2007.

Did yesterday's 264-point drop mark the end of this move? A drop of 7.7% will cause many investors to pause and the bubble talk will amplify. At the same time, the Index still has another 100% to make up before reaching all-time highs again. This will not happen all at once and the current momentum move looks likely to stall into the end of the year.


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