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Chinese Fear & Greed (mostly greed)

Troy Bombardia
2020-07-11
China's fear/greed indicator surged to the highest level in years on the backs of strong speculative buying. This is similar to 1992, 2007, and 2015

As several media outlets noted (data originally from Bloomberg), the Chinese stock market rally pushed the Shanghai Composite's Fear/Greed indicator to the highest level since 2015's explosive rally. Bulls are firmly in control of this market, and perhaps that's too much of a good thing.

There have only been 3 clusters of cases in which the Shanghai Composite Index's Fear/Greed was this high. All 3 clusters saw Chinese stocks plunge over the next 6-12 months:

While copper is sometimes seen as a useful economic indicator and is plotted on a chart against the S&P 500, a price chart that overlaps copper with EM indices is probably more meaningful. Such a ramp higher in Chinese equities was bearish for copper over the next year:

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