Elliott Wave Courses | by ForexCycle.com | Sunday, 12 July 2015 08:00 UTC
By Elliott Wave International
The Shanghai Composite fell another 8% at the open on Wednesday (July 8). Trading was soon halted by the authorities. (But for a different reason that the trading halt on the NYSE the same day.)
From its all-time high on June 12, China's main stock index is down 32%. Using the word "crash" is becoming appropriate.
"At the moment there is a mood of panic in the market and a large increase in irrational dumping of shares, causing a strain of liquidity in the stock market," said China's Securities Regulatory Commission on Wednesday (bold added).
But the "dumping of shares" is not the only type of selling that's going on in China right now. Bloomberg reports that (bold added),
Good question. But if you remember the darkest days of the 2008 financial panic and the now proverbial "liquidity crunch," the situation in China should sound remarkably familiar.
Familiar, because when everything falls in price, it's called deflation. We in the U.S. had a strong brush with it in 2007-2009, Europe has been struggling with deflation over the past couple of years -- and now, it seems, China has caught deflation bug, too.
Here's how our recent Short Term Update put it:
Our current Elliott Wave Financial Forecast adds:
"As Bloomberg summed it up, 'when you can't sell what you want, then be prepared to sell what you can.' There is a lot of indiscriminate selling to come."
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