28 February 2007

Great Balls of Fire Financials Hit Bigtime

Feb 28, 2007 Great Balls of Fire Richard Russell 321gold . . . Inc: "Yesterday the Shanghai Stock Exchange Composite suffered its biggest loss in a decade -- down about 9%. The Chinese government has been warning that it would slow China's furious rate of growth. Bank reserves were contracted a few times, the Chinese central bank stepped on the brakes. The result -- a major smash in Chinese stocks. It was a crash heard 'round the world.
If China slows down, China's enormous export of goods will slow down. China's huge use of commodities will slow down. The activities of 1.3 billion Chinese people will slow down. How much of a change the nine percent drop in Chinese stocks will bring on, remains to be seen. Some see it as merely a temporary warning, a 'gut-check.' Others take it more seriously. My opinion -- major bull moves don't tend to end this way. Major tops entail weeks, more often months, of distribution. I haven't seen the signs of steady distribution yet. I've seen overvaluation, over-speculation, over-optimism, ignoring of risk -- but I have not yet [seen] the signs of distribution.
It used to be said that when the US sneezed, the rest of the world caught a cold. And I wonder, has that changed? Is it China that has now taken the US's place? When China coughs, is the rest of the world in trouble. Hard to believe, but that may well be the case today. Below, a daily chart of FXI, the 'China 25 Index Fund.'"

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