In our China Stock Market Outlook for 2020 and 2021 we wrote about the possibility of China to be wildly bullish in the next 24 months. We did re-iterate this in our 4 Top Emerging Markets for 2020. Today already, just a few months after writing those forecasts we see that China’s stock market is about to undergo an important test: the 3d touch of resistance of the retracement that started in 2014. Important fact: the previous 2 retracments in the last 2 decades took 5 years, the current one is going on for 4.5 years. Will this time be different?
Why do we care about China’s stock market which is considered of ultra risk especially now that it is subject to trade war tensions? The answer is simple: news is a lagging indicator.
The monthly chart is the one that shows dominant trends. That’s why we feature the monthly China stock market in this article.
In fact China’s stocks chart (SSEC index) is one of the simplest, but trading this market is nothing that comes close to simplicity. That’s because of its volatility obviously.
The simplest thing to do for the highest level of success in China’s stock market (in terms of profits) is to wait for several years after a retracement, and then simply wait a breakout confirmation based on the SSEC chart.
In the end there were only 2 moments in the last 2 decades you really wanted to be invested in China: 2006 and 2014. Those results were phenomenal.
Is this the 3d monster rally shaping up? Maybe, and we keep a very close eye on it. Members of our ‘momentum investing’ service which launches next week will be the first to know!
