In June 2015, Chinese stockholders thought the world was falling apart. More than half the companies listed on the Shanghai Stock Exchange halted trading as the market crashed by nearly 30%. With the sell-off deepening every day, Chinese officials were forced to intervene in the market using a “first aid” strategy. They became paramedics for the market, patching up wounds without actually restoring the patient to full health. The .
Financial turmoil in China could ignite a stock market crash and possible economic collapse in 2015. At least, that’s the opinion of famed analyst Jim Rickards. “My point is, the worst is not over in China,” the editor of Strategic Intelligence, wrote in an article about the ongoing crisis in the Chinese stock market. “The market won’t come rallying back, either. That’s not how bubbles work.” (Source: The Daily .
The Chinese stock market is extremely vulnerable to additional episodes of selling. In the process, this could lead to a Chinese economic collapse in 2015 or 2016.
A few weeks ago, I discussed the real threat and contagious impact of a bigger correction in the Shanghai Composite Index (SSE), which had been down 32% but has since rallied to a 22% drop. The Chinese government is going all-out to try .
The overall theme of successful stock market investing so far this year has been the record moves by the technology sector, with the NASDAQ staging another one on Monday.
As many of you know, there have been two major themes in my investment and trading approach: technology and China.
I have long been bullish towards Chinese stocks and the amazing potential of China as a key foreign growth area. The .
Investors were jumping into stock buying on Thursday morning. But while it may be an encouraging sign for the stock market, my advice is not to be fooled by this dead cat bounce.
We will likely see oversold buying after bouts of deep selling (as we have been witnessing). I doubt there are sustainable market gains around the corner; unless the global situation changes and corporate America begins to finally .
Wall Street opened sharply higher on Friday July 10th, as investors cheered the Chinese rebound and felt optimistic over the new submitted proposal by Greece to creditors to win new funds and avert bankruptcy.
Chinese stocks rose sharply for the second day on Friday, with the Shanghai Composite Index closing up 4.5% higher. International stock markets in Asia and Europe rose one percent and the euro rose sharply after the .
History has taught us that a stock market top occurs when there’s euphoria among investors. We have seen this over and over again. And you don’t need to go too far back in history to see it in the making. Just look at the current collapse in the price of Chinese stocks.
Stock Market Top in China
Chinese stocks had a solid run to the upside on the backdrop of .
China’s recent stock market crash has sent many stocks to the floor. It might be a good opportunity to invest after the burst of the giant stock market bubble. As billionaire investor Warren Buffett once said, “Be fearful when others are greedy, and greedy when others are fearful.”
Here is how you can benefit from China’s stock market crash.
Global X China Consumer ETF (NYSEArca/CHIQ)
The Global X .
While Greece is in the headlines as it deals with trying to get funding for its massive $270 billion debt, the real problem that could play out the great crash of 2015 resides in China.
There is a massive stock market bubble brewing in China. And before you think about jumping in, be aware that there will likely be more extreme moves to the downside.
Consider that the country’s benchmark .
Recently, widely followed investor Dennis Gartman told CNBC that China’s bull market is just getting started. However, looking at the fundamentals, I wonder how long this bull market will last. (Source: CNBC, May 24, 2015.)
Stock Market Flying High
The stock market in China has been going up at a dramatic pace since July of last year. The Shanghai Stock Exchange Composite Index jumped up more than 125% from 2,030 .
Immediate term outlook:
The bear market rally in stocks that started in March 2009, extended because of unprecedented central bank money printing, is coming to an end. Gold bullion is up $1,000 an ounce since we first recommended it in 2002 and we are still bullish on the physical metal.
Short-to-medium term outlook:
World economies are entering their slowest growth period since 2009. The Chinese economy grew last year at its slowest pace in 24 years. Japan is in recession. The eurozone is in depression. With almost half the S&P 500 companies deriving revenue outside the U.S., slower world economic growth will negatively impact revenue and earnings growth of American companies. Domestically, America’s gross domestic product grew by only a meager 2.3% in the second quarter, which will negatively impact an already overpriced equity market.
Estimates Aug. 28, 2015
Trailing 12-month EPS for Dow Jones companies (Most Recent Quarter)