It's official: The breakdown we've been tracking in Chinese stocks has turned into a bona-fide bear market.
For the past four months, we've noted how the "Dow Industrials of China," the Shanghai Composite Index, has been stuck in a bearish series of "lower highs and lower lows."
In the past three weeks, this gradual weakening has produced a significant breech of the 2010 low (A). And just yesterday, it produced a MAJOR breech of the August 2009 low of 2,667 (B). This is a decline of more than 20% from its peak… or by most definitions, an "official" bear market.
China bulls say, sure, China is overheated right now, but not so much that a big crash is possible. China bears – like Marc Faber and Jim Chanos – say a market crash is just around the corner. We'll note both arguments and let the market be the judge. Right now, the gavel is coming down for the bear case. The trend is DOWN.
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