Last week, world markets tumbled, as worries over China finally pushed investors to exit in panic! The Dow was down over a whopping 1000 points (-1017.65 to be exact); SPX fell 120.65 points; Nasdaq tumbled 341.85 points.
US markets were holding up well on Monday and Tuesday. But, starting on Wednesday, things started to slide. Thursday and Friday were marked by heavy selling. Tonight, at the time of this writing, Asian markets were down big again! China was down 8.45%; Hong Kong fell 4.64%; Japan lost 3.65%.
Gold traded higher for the week, closing near $1160/ounce. Oil tumbled and WTI traded below $40/barrel.
Let's take a look at China's Shanghai Composite Index:
The above is SSEC's monthly chart, from December 2003 until now. As you can see, in April 2006, SSEC had its first "super jump". In just 16 months, that bull market reached its peak. In just one year after its peak, SSEC basically came all the way back, but, not quite. This time, SSEC starting moving higher in August 2014. In ten months, it reached its peak, in June 2015. In just two months after reaching the peak, SSEC has already fallen more than half way! Assuming the history repeats itself and that SSEC falls "almost" all the way back to where it started, we could be looking at somewhere between 2700 and 2400 before this correction ends. But, the way that it is falling, we could see 2700 before the end of this year!
Now, let's take a look at the US markets:
On Friday SPX fell 64.84 points to close at 1970.89. It daily MAs and MACD dropped sharply. If SPX also continues to drop without a pause, we could quickly see 1900!
Nasdaq tumbled 171.45 points to close at 4706.04. Its daily MAs and MACD also nosedove. Nasdaq's first support is at 4600. But, if SPX were to fall to 1900, I think Nasdaq should be around 4400 or below. For the new week...
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