Sunday, August 23, 2015

SSEC Shanghai Index Daily Chart PBOC Defending 3500

The stakes are high this weekend. The Chinese communists had to step in to support the market on Friday to prevent a failure at 3500. The LOD was 3490. The PBOC (China's central bank) has been holding the line at the 200-day MA as the chart clearly shows. China lost the 200-day MA at 3660 on Friday.

The expectation would be for the PBOC to announce more stimulus perhaps another rate cut or more reductions to the bank triple R's (reserve requirement ratios that dictate the reserves that must be held by banks). Lower reserves promotes more lending. China is quiet as this message is typed Sunday morning in the states. China is 12 hours ahead of eastern US time. It is surprising that the PBOC has not yet announced measures this weekend to pump the stock market higher.

If 3500 fails, complete confidence may be lost in China which will lead to indiscriminate selling. the selling would then cascade around the world as the selling did late last week. If the PBOC announces stimulus, global stock markets should begin the week on a happy note. The SSEC begins trading at 9:30 PM EST this evening (9:30 AM Shanghai, China, local time Monday morning).

China failed to maintain the 200-day MA support at 3660 but intervention did stop the failure at 3500. This area is where the PBOC instituted a rate cut in March to begin the parabolic rise in the stock market.  The 3500-3660 range is critical. Price is breaking downward from the sideways symmetrical triangle. The vertical side of the triangle is 800-900 handles so the failure at 3770 targets 2800-3000. Back tests of the 200-day MA at 3660 and the lower triangle trend line at 3775-ish are in play.

The SSEC is controlled by the PBOC's decisions so if they decide to pump then stocks go higher if the PBOC remains quiet this weekend, the SSEC will probably drop like a stone. It is shameful how the global central bankers have destroyed markets over the last six years with their obscene Keynesian money printing. The Federal Reserve started the sick behavior by goosing the US stock market with easy money beginning in March 2009 and not allowing markets to properly correct and clear. Capitalism and free markets died in 2009. All eyes and ears are on China in the coming hours which will set the tone for global stock markets to begin the week. What say you Chinese communists? Are you going to print more money to goose your stock market higher? This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

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