China introduced for the first time, starting on the first trading day of 2016, a 'circuit breaker' mechanism to curb stocks wild gyration to avert panic in the markets.
The circuit breaker is tied to the benchmark CS1300 index. A 5% swing in either direction will trigger a 30 minutes trade suspension. A further 5% move will freeze trading until the close.
A 7% swing will prompt a trading halt for the rest of the day.
On the very first day of its introduction, CS1300 index dropped 7%, Shanghai market was suspended in the afternoon. SSEC index dropped 6.86%.
On the forth day (Thursday) of trading Shanghai Market was suspended after 15 minutes of trading. SSEC dropped 7%. On that evening China Securities Regulatory Commission announced the suspension of its 'Circuit breaker' rule. SSEC rebounded by 1.97% on Friday.
Shanghai SSEC Index (3,186)
Since its peak in 2007, SSEC has been consolidating until 2014 forming a big A-B-C corrective wave. Within the next 13 months, SSEC moved from 2,011 to 5,166 for a 157% gain, forming the major wave 1. Currently SSEC is forming the wave c of 2.
If wave c were to drop 40%, same as that of wave a, 2,180 could be the target, another 1,006 points or 31% to go.
Dow (16,346)
On the first trading week of 2016, Dow dropped 1,079 points or 6.19%. With this sharp drop, I need to have another look at Dow's long-term chart.
Since its bottom of 6,547 in March 2009, Dow has been forming its super wave VII. From 6,547 in March 2009 to 18,312 in May 2015, Dow might have gained 180%, but when compared to its super wave I (+372%), super wave III (+981%) and super wave V (+1,410%), I feel that the magnitude for super wave VII is rather small and I suspect the last high of 18,312 in May 2015 is not the end of super wave VII.
It remained possible that Dow is at the tail end of its major wave (6), mega wave 1 has 9 major waves.
Another more bearish possibility is that mega wave 1 has only 5 major waves and it has ended in May 2015 at 18,312 level.
Dow is currently forming its mega wave 2 correction. It is at the sub-wave iii of wave (iii) of wave A of its mega wave 2, still a long way to go.
FBMKLCI (1,657)
If mega wave (5) has 5 major waves, KLCI is currently forming its major wave 5.
Unless major wave 5 is missing, then mega wave (5) has only 3 waves and it has been completed. Under this scenario, KLCI is at the starting of its super wave II correction. Personally, at this moment, I consider this scenario as unlikely but at the same time I can't say it is impossible. Anything is possible in stock.
EG Industries Bhd (Rm 1.23)
Very likely EG is at the sub-wave iii of its wave (vii) of its major wave 3.
Emico Holdings Bhd (Rm 0.355)
If Emico can continue to move higher and break its previous high, then it is on its wave (vii).
However there is also this possibility that it is forming the wave b of its major wave 4 if its major wave 3 has only 5 waves.
http://chanky50.blogspot.my/2016/01/first-week-of-2016-disastrous.html
