Mar 282012
 

On 18 March I posted a rather lengthy discussion about HOW we should wait for a particular sweet spot which offers a low risk buy level.I used the Shanghai Stock Index as my example, and made the following points.
shanghai stock index 27 March 2012
“If we now get a move above the reflex point in five waves, then we can be more confident of buying (in stages) from a 50% correction because any subsequent rally will be a third wave in the progression.This is ‘how’ we should really be using Elliott Waves. To plan ahead, and be aware of when the odds shift in our favor. The right plan and an ample supply of patience to wait for those sweet spots will reward you handsomely”.

The Key point above was a requirement to move past the reflex point to confirm the recovery was indeed an impulse wave worth risking money. Once the reflex point was crossed, we will still wait patiently for a 50% correction before buying. This was the plan. In the meanwhile, we came with up tentative labels that will alert us should something go wrong. So I proposed calling the first move up as wave 1, and said that we should not come below that level.

Guess what! The index has closed below the top of wave 1, effectively sending all the bulls to McDonald’s to become a value meal. Because we are using Elliott Waves the way it should be, we managed to neatly sidestep the whole chop, ie we avoided the bull trap. Even if you have only been a spectator, the lesson is very valuable. The scenario we just witnessed in Shanghai could happen in any other instrument and in any other market! From that point of view, what you have seen here is a lesson in real time. Enjoy!

Oh, do I hear someone asking what is the outlook from here. Well, once again, there is no question of playing from the long side until we know a bottom is in place. We could get a mild recovery from the 2230 levels, but then again, as a WaveTimes reader you don’t want to be playing that move because we need to see a 5 wave decline finish first before even considering whether we should buy at all. Alternately, we should see a massive rally higher that will take out wave (1) around 2380 directly, and I doubt this second scenario will happen immediately.Lets see.

  14 Responses to “Shanghai Stock Index Update”

  1. Thank you Sir for the update.

    I did another wave count on weekly, here it is: http://screencast.com/t/w5CKppqC

    Hope I can get it right this time!

  2. Hi,
    i think its wave (3) in C down after a triangle in wave B ending @ 3062. i.e wave C is extending.

  3. Hi Shashank, I am not sure what you meant, can you put a chart to elaborate please.

    thanks.

  4. Dear Ramki,
    Looking forward for a Shanghai Stock Index Update Elliot Wave Analysis. I know your on vacation, and I hope it was splendid. We are waiting for you everyday patiently to come back.

  5. The Shanghai composite has officially began its rally for 2012. China stock market has turned bull, best time to enter is now. Let the rocket launch countdown begin…

  6. Last chance to enter the Chinese Stock Market, Best time ever to make huge profits, bargain hunting is currently the name of the game now.

  7. The market has bottomed out, last chance in July to get cheap stocks, Aug will have strong rebound, September will be even stronger. This market has to much support at 2132 level, very difficult to break, even if broken, it will release a very strong rebound, but I truly doubt it can break it for more then 2 days.

  8. to Shanghai Composite Guru
    This is a site we learn EWP from Ramki .

  9. Hi,
    I have read all your posts, strong follower to your site, always promoting you to friends and co-workers. We would truly love and appreciate a Shanghai Stock Index Update. Reading the Shanghai Stock Index Update you had written in Jan, the Index is inching closers to your prediction of 2010. Thank you so much for all the time and effort.

  10. Dear Ramki,
    I have informed my Chinese friends on your reply, they are beginning to follow your website, much obliged to all the expert technical analysis you have provided to the world. Furthermore, we thank you deeply for time.

  11. Dear sir

    In the past haft year, China stock index made a new lower point. And its the most wired market in this planet.

    As a Chinese, I sometimes suspect that the China stock does not follow the elliott rules.

    I kindly request you update the China stock elliott wave chart.

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