China's Shanghai Composite

China's Shanghai Composite is up over 300% since the late part of 2005 and is undergoing a Parabolic Move.   Meanwhile similar Parabolic Moves occurred in the Nasdaq back in the mid to late 1990's, Japan mid to late 1980's and in the Dow (mid to late 1920's).

Of course nobody knows when China's market (Shanghai Composite) will peak however when it does past history tells us that a substantial sell off will follow.   In each of the previous cases there was a large sell off once the Parabolic Move ended in the Dow, Nasdaq and Nikkei 225 as they all dropped 79% or more from their peaks as shown in the charts below.

At this point it's not a question of if but when China's market (Shanghai Composite) will go through a similar sell off.  Also the other thing we have to consider is, when the sell off does finally begin in China, how will it affect the other markets around the world.  Remember back in the Fall of 1998 when the Asian financial crisis spooked the world markets which led to a 22% drop in the Dow over a 7 week period.  That could end up looking like a drop in the bucket if the Shanghai Composite unravels and goes through a substantial correction like we have seen in the past.   As mentioned above the Dow, Nasdaq and Nikkei 225 all dropped 79% or more after their Parabolic Moves ended.


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