04/11/2015 Weekend Update

[BullBear52x]

USO, a trade >18.5 = Screaming buy.

[BullBear52x]

HYG, another example of end of consolidation breakout.

[BullBear52x]

TLT, a trade <29 = Screaming sell.

A consolidation phase still going.

[BullBear52x]

GLD, looking at 125ish anyone?

[Al_Dente]

Where in the world is the money flowing?
Shaded green = relatively strongest
Shaded red = relatively weakest

The net is buzzing about bubbles. The perma-bear sites are already laughing about rumors of doormen in Hong Kong quitting their jobs to day-trade the
Hang Seng (recall the “shoeshine boy” indicator in mid-1929 New York).

There have been many bubbles in recent history; here is just one example:
GLD, the oldest commodity ETF, launched in 2004. “For the first time ever” folks could participate in the precious metal inside the stock market (rather than futures or the physical commodity). As many portfolios only allowed stock-market investments, and hence had previously been absent gold, every portfolio manager on the planet HAD TO OWN GLD [great story, by the way]. Gold pundits never agree on anything, but many/most now believe that the huge run-up in gold (from circa 2006 to 2011) was actually caused by the flood of funds into the “first-time-ever” GLD ETF.
It’s difficult to trade a bubble, as they often last for years. The best method I know is to enter as soon as possible, use a “trendline” or a
“purple crayon” (your lines and MAs will be different) that gives the bubble room to bounce around, determine your maximum drawdown (this-far-and-no-further), keep raising your stops, and when the bubble eventually bursts, as it always does when demand is depleted, you’ll get stopped out a happy/rich person.
Addendum: History of the GLD ETF: http://etfdb.com/2013/the-complete-history-of-the-gld/

The current China story is vibrant, and it involves demand.
Wednesday (4/8) new regulations in China allowed mutual funds to invest in Hong Kong-listed shares (“for the first time”).
Thursday (4/9) volume on the Hang Seng surged to three times the average daily volume over the past year and 20% more than the previous record in October 2007 (demand). "This time is different” compared to 2007. Notable action came from mainland mutual funds accessing Stock Connect, which was previously limited to wealthy individuals.
Thursday (4/9) Hong Kong and Beijing signed a tax treaty that ends double taxation for equity traders. This is widely expected to “boost passenger flow on the H-shares to A-shares “through-train”. In theory, the opening of the A-shares market to foreign investors means more demand for Chinese equities which would mean higher prices for stocks.

google the Shanghai-Hong Kong Stock Connect program and the Throughtrain Program for more info

When the Shenzhen Exchange is added to the Shanghai-Hong Kong Stock Connect program, Hong Kong-listed small-caps will become eligible for mainland listings (“for the first time”). That is expected to stoke another flurry of buying [demand].

CAVEAT: This is not a recommendation , just musings on bubbles from a student of bubbles (NOT an expert on China).
If China is bubbly, and it looks like it may be in the early stage, it could last for years, and trading it will be both profitable and treacherous.
On a side note: If you do happen to be long a bubble, you can use your new Apple Watch to monitor your heart rate.
This chart is 17 years:

[fehro]

...When the Shenzhen Exchange is added to the Shanghai-Hong Kong Stock Connect program, Hong Kong-listed small-caps will become eligible for mainland listings (“for the first time”). That is expected to stoke another flurry of buying [demand].

...
If China is bubbly, and it looks like it may be in the early stage, it could last for years, and trading it will be both profitable and treacherous.
...

$SSEC weekly...Has room..for another 50%-100% if top channel gets tagged..

[Cobra]

broadening top it is. now let's see if there's a partial rebound first.

[Cobra]

not sure if this long shadow means the low was in. wait.

[quientuves]

Hi, Cobra! This is the Weekend Thread...!!!

[K447]

not sure if this long shadow means the low was in. wait.

Why posting in the weekend thread?