Earlier this year there was a pretty big obsession with the role that the Shanghai Composite was playing as a leading indicator for the stock market. Here, for example, is a post from April 27, 2010.
We’ve gone back to that several times throughout the year.
And now the Shanghai composite and Hong Kong are tanking, so it just makes sense if you’ve been following things that the US market would tank. And it has been.
And yet, radio silence regarding China. We didn’t hear a peep about it today on CNBC. It was all Korea, Ireland, the euro, etc. ZeroHedge, in a poll it put up regarding the selloff, didn’t even mention it was an option.
What’s the deal? Why is everyone ignoring this indicator now that it’s become useful again. Our only guess so far is that people get distracted by clear headlines… narrative fallacy, but that’s just a guess.