After Dow, is Shanghai next?

The Shanghai Stock Exchange Composite Index ('SSECI') is at it again; taking out another psychological level. This time it has passed through the 5000 mark as effortlessly as it did at the 4000 mark. Nevertheless, it is worth noting that correction occurred before or after each occasion when the SSECI tested & broke above such psychological level. When it pushed above the 4000 mark in end May, the SSECI corrected from its high of 4300 to a low of 3400; giving up 900 points. The 3400 mark was the long-term uptrend line support for the SSECI at that point in time. If a similar correction were to recur at the present 5000 mark and the SSECI were to pull back to its present long-term uptrend line support of about 3900-4000, the drop may surpass 1000 points! While talking heads may say that such corrections are healthy for the market, I wonder how the investors on the ground will take it. Good luck, Shanghai.


Chart: SSECI's daily chart as at August 27 (courtesy of Yahoo Finance)