We have been bullish on China’s stock market (SSEC) for a long time. Even last year, when literally everyone was bearish on China, we said to look at China’s stock market as a major buy opportunity. As it always goes, and per our investing tips for success, the most profitable investing opportunities present themselves during ugly times and takes a while until it delivers amazing returns. That’s why we continued to be bullish on China, our China stock market outlook did not change since we published it almost a year ago. Patience is one of the keys to amazing returns, next to good analysis of trends and the ability to correctly time an exit. This is why we believe the new stock bull market in China will start in 2020!
In order to answer the question when China’s stock market will turn bullish we look at the long term chart of Shanghai’s stock exchange (SSEC), the leading stock index in China.
If anything the the long term chart of the SSEC looks gorgeous! Not only because of its breathtaking long term uptrend, but also because of the accuracy in respecting its channel.
This obviously is a dream for smart investors, as it helps them tremendously to time the market.
As one smart investor said: timing is not the most important thing, it is the only thing.
As we closely look at China’s stock market per below chart we see a secular uptrend in the rising channel. On a tactical level (say 1 to 3 years) we see several medium term bear markets which always started after a huge bull run.
Here it becomes interesting.
- In the last 20 years there have been 3 major bull markets in China’s stock market: 2001, 2007, 2015.
- Every bull market had a subsequent bear market.
- The stronger the bull market the longer the bear market.
- The bear market after the 2001 peak lasted 4 years. The bear market after the major 2007 peak lasted 7 years. The bear market after the medium 2015 bull market is now in its 4th year.
- Every bull market started a few months after testing secular support, and confirmed it when crossing tactical bear market resistance.
This suggests that the next bull market in China’s stock market will start late in 2019, and will pick up bullish momentum in 2020.
We are strongly bullish on China’s stock market especially going into 2020. We believe below chart and the consistent cycles on this chart make the point that the new bull market in China’s stock market will start in 2020.
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