A China Stock Market Crash In 2017? Not Really!
A crash in the China stock market in 2017? Well, you would think that a crash is imminent in China when reading these headlines:
- China’s Stock Market Is About to Crash — Sell Before It’s Too Late (by The Street in March)
- This economist thinks China’s stock market is headed for a 1929-style crash (by MarketWatch in July)
- China’s stock market crash matters to all of us (by Mashable in January)
- Another China Stock Market Crash May Be Coming (by Investing.com in June)
- We Just Found a Major Stock Market Crash Indicator in China (by Wall Street Examiner this week)
- China’s B-Shares Stock Index Unexpectedly Crashes 6% (by ETF Daily News this week)
- China’s Red-Hot Property Market Risks Missing Lessons From Japan’s Crash (by Bloomberg in September)
You got that picture. Try looking for any positive comment or analysis on China, good luck with that.
Now, uncoincidentally, those are exactly the conditions to create an interesting situation: as everyone expects one thing to happen, the market turns to the other side. Indeed, the stock market in China is doing exactly the opposite of what all the analysts in the above-mentioned articles are expecting. China is making a silent but huge breakout, right at a time when everyone is expecting a stock market crash.
Just one simple glance at the chart of the Shanghai exchange learns that the stock market in China will NOT crash in 2017, on the contrary, it is setting for great gains. That also comes at a time when we said the U.S. stock market will not crash in 2017, so we see a really consistent picture across markets.
The only question, to us, is how far China’s stock market will rise: will it test the 2015 highs, which is a likely scenario, will it break those highs, or will it stop rising around the intermediate peaks of June / December 2015? Time will tell, but, until we know that answer, we see an excellent entry point for nice gains in China’s stock market in 2017.
(Click on image to enlarge)
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