^ Whoh, is this technical analysis, on a CFA forum? 
can you post your chart
More of a gut feel from watching trade & price action over the summer… Something “feels” off lately
Weekly $SPX
http://stockcharts.com/h-sc/ui?s=%24SPX&p=W&yr=5&mn=0&dy=0&id=p93953246656
Weekly CSI 300
http://stockcharts.com/h-sc/ui?s=%24SSEC&p=W&yr=5&mn=0&dy=0&id=p71326392245
EDIT: I intended to say the 200MA on the weekly for CSI 300… Just draw a line out about 12 months and you’ll get my rough price target of around 2750.
Hmm, this is why I don’t trust technical analysis. It totally ignores the massive fundamental changes that have happened in the market since prior index levels. There’s no real reason why prior undervaluations need to apply going forward, unless all the changes that have happened since 2014 reverse. Some think this is just a correction in a larger bull market (basically growing pains as CN allows more sophisticated financial tools and opens to the world). BTW there was some guy on Bloomberg TV doing technical last night. He says we see a bounce to 3400 on the Shanghai Composite, and then retest the lows again (I guess 2800-3000) so that we see “seller exhaustion” (which he says was postponed because of intervention), then that’s the bottom. The 3400 number has some fundamental meaning, in that the gov-directed funds are allowed to sell after crossing that level (if I remember right).
Market behavior can ignore fundamentals or how the market dynamics have evolved (to the good) in the short term. That will be "realized"in the long-run
The further the reaction to the upside, the more reaction to the downside. Seen it over and over again, regardless of the core fundamental premise being right or wrong.
That guy on Bloomberg sounds like he has the right idea. Upside bull trap followed by some degree of capitulation. Although I think the Chinese gov’t hand supporting the market will make it difficult to tell, might just make sense to scale in on dips <3000 and not worry about a percise target.
Right. Prices are attached to fundamentals, but with an elastic like a bungee cord.
A bit of a side story – China (we assume?) delivering a beating to the silly currency speculators who were pushing for more depreciation of the offshore RMB (USD/CNH). Being long CNH I’m of course happy to laugh at their misfortune. Why would you go against the largest currency reserve stash on the planet when they told you in plain language they would defend? Better to use that cash on Brazil’s real, I would think.
A 1.35% move at present, which is huge for CNH…
if prices are being driven down by technicals. i just buy. the lower it goes the cheaper it gets. technicals = never important.
The market seems to be completely ignoring fundamentals in this environment. I would say technicals are more important than they have ever been in recent years. It’s a price momentum market.
seems like momentum is slowing down then boom
I really liked Damodoran latest bit about how people hype up the Fed way too much. His bit on valuations was interesting:
3. The reason stock prices are so high is because rates are low If this bull market has been entirely or mostly driven by the drop in interest rates, the expected return on stocks should have declined in line with the drop in interest rates. In my most recent update on this number at close of trading on August 31, 2015, I estimated an expected return of 8.50%, almost unchanged from the level in 2009 and higher than the expected return in 2007. . . At least based on my estimates, the primary driver of stock prices has been the extraordinary fountain of cash that companies have been able to return in the last few years, combined with a capacity to grow earnings over the same period. By the same token, if you are concerned about cash flows, it should be with the sustainability of these cash flows, for two reasons. The first is that earnings will be under pressure, given the strength of the dollar and the weakness in China, and this is starting to show up already, with 2015 earnings about 5-10% below 2014 levels. The second is that companies will not be able to keep returning as much as they are in cash flows; in 2015, the cash returned to stockholders stood at 91% of earnings, a number well above historic norms. In the table below, I check to see how much the index, which was at 1951.13 at the close of trading on September 3, would be affected by an increase in interest rates (increasing the US 10-year T.Bond rate from the 2.27% on September 3, to 5%) as contrasted with a drop in cash flows (with a maximum drop of 25%, coming from a combination of earnings decline and reduced cash payout): http://aswathdamodaran.blogspot.com/2015/09/the-fed-interest-rates-and-stock-prices.html
I heard Damodaran speak about two years ago and he observed that there was an interesting paradox:
Bond prices are currently priced as if there are expectations of an enduring depression
Stock prices are priced as though the future was one of growth growth and more growth.
At least one of these views is wrong, and perhaps both.
I don’t get the sense that it’s really changed that much since two years ago.
Now one can argue that the Fed is manipulating the FI market, so the bond market is the wrong one and an unmanipulated market would suggest that there is more growth in the pipeline. But the stock market looks expensive anway. So maybe they’re both wrong.
did you read the other parts of his post? It is interesting, he talks about the limited impact he thinks the Fed has had on the FI market and calculates his “expected interest rate” to show what causes it
economic growth has been shown to have a negative effect on stock prices because it typically comes with high inflation and usually high interest costs. those who say stocks will do poorly because economic growth expectations are terrible are a little misled.
high growth, high interest rates (due to policy setting), high inflation = bad
negative growth, high interest rates (due to credit worries), deflation = bad
low growth, low-to-moderate interest rates, low inflation = great
don’t get me wrong, i don’t think equity valuations are attractive by any means with the Shiller PE at 27 (due to a slightly overvalued market based on basic PEs + excessive corporate profits) but we are in the absolute best possible environment for corporations at the current time.
This assessment which came out today, seems like a more balanced view on the Chinese economy. It’s a mixed picture as they shift from manufacturing to consumption, a bumpy ride for sure, but hardly the crisis the Western media has been making it out to be…
China Beige Book Says Pessimism `Thoroughly Divorced From Facts’
Ah yes, China is joining the debt fueled consumerism train. Keep that free money going, baby!
Okay I am impressed – an economist, and a Canadian even, saying stuff that makes a lot of sense.
This David David Rosenberg fellow got tough on the dummies, paraphrased “why are all these clueless people with zero knowledge on China, talking about China manufacturing PMIs and commodities crap, consumer discretionary is where the action is going foward, if you are misaligned on China, then you should have been paying attention!”. He also talks about the property sector.
Starts at 3:42min
http://www.bloomberg.com/news/videos/2015-09-30/u-s-canada-china-a-global-view-of-housing
…and now CN service sector PMI released, still a rock solid 53.5.
But this number was completely withheld from all DJ News Wires, which only talk about the “six year low manufacturing PMI”. I had to sniff around the internet to find service PMI buried at the bottom of some CNN article. At this point it is clearly intentional withholding of data by the Western media. Why? Cause it doesn’t fit the “OMG China collapse” narrative?
Known by his friends as Dave Dave.
anyone else going long before the rate hike?