SSEC Shanghai Index Daily Chart Crashes -8%

The SSEC, China's Shanghai Index, crashes -8% on Monday, 1/19/15. The SSEC was above 3400 intraday on Friday and drops to a low at 3095 only a few trading hours later. That's going to leave a mark. The gap down is intense and price closed at the lows. Despite the mini crash note the parabolic move higher in the index over the last couple months.

China's regulatory commission, the CSRC, placed the kabash on the three largest brokerages from opening new margin accounts. The margin debt has grown spectacularly over the last year; the margin chart goes up exponentially and parabolically. Chinese are scraping up any bit of cash they can muster and then leveraging that to the maximum possible extent to buy stocks. As Keystone's friends in Brooklyn will tell you, "good luck wit dat." That type of behavior never ends well. China is stepping in to try and stop the stock market bubble from growing while at the same time trying not to pop the bubble. 

The red lines were universally set up with negative divergence wanting a spank down and the news on restricting margin accounts served as the catalyst to begin the smack down. The indicators are weak so lower lows in price would be expected after any bounce occurs. Price may play around between the 20-day and 50-day MA's until it can get its sea legs back. A -8% whack with a 2x4 across your head will stun you for a few days. China is set to begin trading shortly as this is Monday evening in the States as this is typed. China GDP hits in a couple hours time and will influence global trading overnight especially copper and other basic resources. 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.