(Click on the picture to enlarge)As mentioned in my previous post regarding the Shanghai Composit, where I statede that a break below the gray supportline would confirm that and important top is firmly in place.
The rise in the Shanghai Composit has been created mainly because of the Chinese government forcing banks to lend out to just about everyone, if just they were employed. Alone in 2009 banks have lend more than USD 1 trillion. Most of that has gone to buying cars, real estat and stocks ( in mid July close to 500,000 new stock-investment accounts where opened in just one day - Can you say bubble?), but with the top in place in the Shanghai Composit everybody invested now has to rush to the exit to protect any possible gain og minimise the losses.
Anyone with a loss small or big now won't be able to pay back their loans, that will bringe down consumtion, have real estat prices going down forcing consumption down even more and so on.
Technical speaking we are currently sitting at the 50% retracement of the rise from 2,037 to 3,478, which in the short term could spark a seconde wave rally up to 2,925, the wave 4 top of a lessor degree. A frim break below 2,713 would call for a directe move down to the 61,8% retracement at 2,587, but this is not the prefered picture at this point.
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