HAPPENING NOW: China’s unfolding market crash resembles 1929’s Black Thursday, plunging world economy into depression
08/21/2015 / By Chris Draper
History repeats itself, for better or for worse. China’s stock market is in free fall in the same way the U.S. stock market crashed in 1929. Many fear the debacle has the world’s economy teetering on the brink of a major depression.
Chinese stocks are expected to drop 9 percent again in the next four to five days. The losses could be as bad as the losses that occurred during U.S. exchanges in the Wall Street crash of 1929, according to Thomas DeMark, founder and CEO of DeMark Analytics.
DeMark reports that the upheaval on the Shanghai Composite Index is on a path to destruction that resembles the crashes of 1987 and 2001. However, it could plummet even further according to DeMark. He predicted that the Chinese stocks would drop an additional 14 percent within three weeks in late July, which resembles the stock market crash of 1929.(1)
“That’s what could happen,” he stated to CNBC. “In 1929, the market declined 50.6 percent. So that was a warning that there was something more serious in the market breakdown.”(1)
Largest single day loss in a decade
One would have to be crazy to deny that China’s stock market is on the downturn. The Shanghai Composite Index lost 30 percent of its value within a three-week period in mid-June. After it rebounded, the Shanghai Composite plummeted again in late July. The end result was the largest single-day loss in nearly a decade.(2)
DeMark stated this his company turned bearish on China on July 12. At the time, the market topped, and it has predictably dropped by 38 percent since then. “The die has been cast,” said DeMark, as reported by The Washington Post and Bloomberg. “You cannot manipulate the market. Fundamentals dictate markets.”(1,3)
He believes that the Chinese blue-chip index, which closed 4.3 percent lower Friday at 3,509.98 points, to drop anywhere from 3,282 points to 3,200. However, his model predicts that a possibility of a 40 percent rally, which would be parallel to the activity in 1987 and 2001. But it could get worse. DeMark believes that a further fall is feasible and would mirror the world stock markets during the Great Depression.(1)
“Markets bottom on bad news, not good news. You want to have the last seller sell. We got good news at the recent low. The rally is artificial,” he said.(4)
“We can’t determine that right now. We think there’s going to be great rally, meaningful rally off the 3200 (points), or even worse case 3282, and we’ll see a retracement of 40 percent of the decline. And at that time we can reassess what the outlook is,” he told CNBC.(1)
Chinese stock market was “preordained”
DeMark believes that the move on the Chinese stock market was “preordained.” Beijing authorities are short selling. Many public firms have been able to stop trading their shares for the past few weeks. Experts believe that China may be attempting to cause it stocks to reach their lowest points, so that foreign investors will not be able to conjecture about its indexes. China’s interference has created a vacuum in the market that has DeMark worried.(1)
DeMark’s predictions shouldn’t be taken with a grain of salt. He predicted the bottom of the Shanghai Composite Index in 2013. Following this prediction, he reported that the U.S. stock market had reached an inflection point that was just like the time before the stock market crashed in 1929. He did highlight that certain preconditions had to be realized before “turning all-out bearish.”(1)
The tell-tale signs suggest that the global economy is on the verge of complete collapse. You can learn more about the current market crash by visiting MarketCrash.news, powered by FETCH.news. To learn more about the upcoming systemic collapse in financial markets, watch the video below by Mike Adams, the Health Ranger:
Sources include:
(2) LATimes.com
Tagged Under: Black Thursday, China, financial collapse, Great Depression, market crash, world economy
