One of the ugliest charts of the year has been the Shanghai Composite, which continues to sink to new lows as other global stock market indexes near their highs.
Tom Fitzpatrick, Citi’s top technical analyst thinks that the Shanghai Composite is setting up for another huge leg down.
Here’s an excerpt from his latest report via King World News:
We believe the Shanghai or Chinese stock market is now breaking through the last vestiges of support (see chart below). If we do push decisively through this area, around 2,050 on the composite, we think there is a real danger that it could open up the way to take us all the way back to the lows that were posted in 2008, around 1,665, or an additional plunge of roughly 19% on the Shanghai Index.
If we get a close through this support, then the bias would be for an acceleration to the downside.
Photo: Citi via King World News