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China Rally Defies Market Plunges Elsewhere

  • Written by Syndicated Publisher No Comments Comments
    August 6, 2014

    The breakout of China’s market from its five-year bear market is looking more real all the time.

    It was particularly impressive how it moved so independently of the U.S. and European markets recently, rallying further as they sold off so sharply.

    Even on days when Asia markets were down, China’s market stood above the crowd.

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    However, it has now become short-term overbought above its 50-day m.a. and probably in need of cooling off short-term. It would probably be wise to delay taking new positions, although waiting for pullbacks in the early stages of a new bull market, if that is what this is, doesn’t always work out.

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    Meanwhile, the IMF forecasts China’s GDP to grow 7.5% this year (down from 12% a couple of years ago), but its market is out of favor after a severe 5-year bear market that has the Shanghai Index selling at 7.9 times projected 12-month earnings.

    And U.S. GDP forecast at just 1.7% growth for the year, with its market very much in favor with investors after a 5-year bull market that has the S&P 500 selling at 18 times projected 12-month earnings.

    That is quite a contrast.

    Warren Buffet has raised high level of cash?

    Bloomberg News reports that cash at Buffett’s holding company Berkshire Hathaway Inc. was more than $50 billion at the end of June, “the first time it finished a quarter above that level since he became chairman and chief executive officer more than four decades ago.”

    The Bloomberg article quoted Wedgewood Partners’ Rolfe as saying, “The guy’s not going to spend the cash just to spend it. He’s the best market timer I ever saw.”

    Sy’s interview on U.S. and China markets.

    Steven Halpern interviewed me last Thursday on the MoneyShow.com, on my outlook for the U.S. and China markets.

    If you would like to hear the interview or read a transcript of it, click here.

    http://moneyshow.com/articles.asp?aid=DailyGuru-40679

    To read my weekend newspaper column click here:  Buy the Dip, Bail Out, or Just Worry

    Images: Flickr (licence attribution)

    About The Author – Sy Harding, Street Smart Report

    Sy Harding publishes the financial website Street Smart Report Online and a free daily Internet blog at Sy’s Free Blog. In 1999 he authored Riding The Bear – How To Prosper In the Coming Bear Market. His latest book is Beat the Market the Easy Way! – Proven Seasonal Strategies Double Market’s Performance!

    It includes our research and analysis on the economy and markets, and provides charts and buy and sell signals on the major market indexes, sectors, bonds, gold, individual stocks and etf’s, including short-sales and ‘inverse’ etf’s.

    It provides two model portfolios as guides. One is based on ourSeasonal Timing Strategy, one on our Market-Timing Strategy.

    In depth updates are provided every Wednesday, with interim ‘hotline’ updates every time we make a trade. An 8-page traditional newsletter Street Smart Report is provided on the website every 3 weeks, in pdf format for viewing or printing out.

    There is the Street Smart School of online technical analysis ‘seminars’,commentaries to keep you ‘street smart’ about Wall Street, and much more. 

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