China’s Shanghai Composite continues to struggle, despite fresh stimulus measures announced yesterday by the central bank and more following the market’s close today. An accumulation of seemingly desperate, reactive and ad-hoc measures by Chinese authorities in response to the stock market sell-off and a slowing economy in recent months have not instilled confidence in many investors – not just in China, but across the globe. Hence the volatility on world markets.
With some obvious difficulty, China is trying to manage the transition from an era of smokestack industries, massive exports and huge infrastructure spending – aided by trillions in state-backed debt – to a consumer-driven economy with more private entrepreneurship. Today, debt has swelled to more than twice the size of the economy. This is a communist government still on a major learning curve, and risks are substantial. As one analyst commented, “The simple reality is that China does not have a grand master plan for economic reform that it is steadily executing step by step.”
Shanghai 2-Year Weekly Chart
The Shanghai has followed a very predictable pattern since its breakout in July of last year. An important top was clearly forming in very overbought conditions in June, highlighted by an RSI-price divergence, and John correctly called the breakdown of the Great Run in late June when the Shanghai breached an uptrend line in place for many months. Unsophisticated Chinese investors borrowed heavily to chase the market right to its peak at the encouragement of the regime.
The next critical breakdown came Monday below Fib. support at 3400.
Overnight, the Shanghai fell another 39 points or 1.2% to close at 2926, despite a 3% jump in the Nikkei average.
The Shanghai remains in the midst of strong “C” wave to the downside that may not be straight down but another 20% slide before a potential bottom is put in is certainly not out of the question – ultimately, a full retrace back to the 2000 chart support is possible before the year is out.
There will be rallies but the primary trend now is bearish.
A key area that this chart suggests will be tested is 2300 (Fib. support). The ADX indicator shows a strong bearish trend, RSI(14) remains vulnerable, and the 200-day moving average (SMA) – not shown on this chart – could begin to roll over within a month or so. Chinese authorities created a fixed-asset bubble and then a stock market bubble, and the affects of that fallout have had impacts across the globe.
Shanghai 2-Year Weekly Chart (through yesterday)
I agree with previous posts that a positive announcement, specifically that DBV has resumed drilling, will ignite some action on both DBV and GGI. I also read speculation this past weekend here,that we could hear positive news this week. I am just wondering if anyone has heard anything further in this regard. My own guess is that DBV has probably been meeting with gov’t and first nation reps quite diligently over the past several weeks but investor confidence would certainly get a boost if we heard something factual.
Comment by Jamie — August 26, 2015 @ 7:20 am
No question that DBV needs to get news out, Jamie, and rather quickly, though they just can’t put news out for the sake of news…obviously progress has been made in the district given the fact GGI is now on the ground…the delay regarding DBV, I’m speculating, could be related to what occurred at the blockade…if I were Chad Day, I’d be very, very concerned about potential actions stemming from that decision on his regard to carry out the circus that he did…the law is clearly on the side of DBV (and GGI) in the sense they have legal multi-year permits and the backing of a Land Use Plan…I’m confident DBV will clear the air shortly and then light things up again at the Hat…
Comment by Jon - BMR — August 26, 2015 @ 7:51 am
Jon,the longer I see this drag on,the more it looks to me like Regoci was given permission only to do surface work.I don’t believe he has been given permission to drill at this point.
If I would trust anyone at this juncture,it would be Farshad,who has put his own money into the firing line,and he hasn’t spoken one word yet.
DBV was in the middle of drilling and drilling was the main concern for the natives that put a stop to the whole project.
The gov’t has been tight-lipped.Farshad has been tight-lipped.Regoci has only said that surface work has been allowed which will lead to drill targets,not that any drilling will be done.And since then he hasn’t said anything either.
Imo,Regoci used the opportunity that the Grizzly news allowed to pump his Mexico interests,which we all know never moves the market by itself.
Imo,follow whatever Farshad is doing,and if he isn’t able to come out with anything,it’s because he can’t take the chance of jeopardizing what he has going to this point by speaking about what hasn’t occurred.
Regoci is something else,and we have all seen him drag his feet for two years without concern for the shareholders as everyone has seen GGI’s stock plummet.Whatever his true plans are about what he can and can’t do,he is keeping to himself in case he wants to raise some cash in the market.He’s got this card to play because people think he’s actually going to drill when he may not even have permission to go past the surface work,and he isn’t talking.This is his M.O.from what we’ve seen the last two years.
Everything else has been speculation,as all investors want to believe the drilling is imminent,when in fact,it may not be at all.
I know this all sounds negative,but I don’t trust Regoci,and Farshad hasn’t come out with one word throughout this whole process,and he has the most to lose.
Imo,the surface work is as far as it goes.
Comment by jim niles — August 26, 2015 @ 8:38 am
Jim, Regoci only has “permission” to do surface work? I think not. We’ll leave it at that for now.
Comment by Jon - BMR — August 26, 2015 @ 9:06 am
“Indeed this will be a busy and exciting summer at the Grizzly as productive discussions with all stakeholders concerning this emerging world class district are giving us great encouragement,” stated Regoci.
Jim, I thought you were talking a load of nonsense so I went back and checked what the PR said. I’m afraid to say that you actually are speaking sense as there is no mention of actual drilling planned yet. ”Great encouragement” sounds like the agreement to commence drilling has not yet been reached IMO. That is not to say it won’t happen, but at the time of the PR, talks were still ongoing. GGI do need to spend the FT funding by the end of this year.
Comment by Tom UK — August 26, 2015 @ 9:29 am
Tom, our sources up north give us a high level of confidence that the drills are going to be turning…
Comment by Jon - BMR — August 26, 2015 @ 9:38 am
Thanks Jon, I look forward to a PR from both GGI and DBV confirming it. How many metres will $1mil buy? I’m guessing 5,000m at least, which will take a couple of months and then assaying, so maybe a nice big Christmas present for us all.
Comment by Tom UK — August 26, 2015 @ 9:45 am
LOL Jon I think you are 100% correct about what must be going on in Chad Days mind. He arrives with his rag tag crew to stop drilling carrying a rifle, which I could not imagine was for anything other then intimidation. The truth is as much as I want news, I am kind of glad it did not get issued before the Chinese flu outbreak. I have heard Farshad called a pitbull and if that description is correct, I am hoping that he won’t be issuing news until every last detail is 100% settled, with clear a path ahead. My hope of course is that this news will be out in the very near future.
Jim with regards to Regoci, I appreciate your opinion but will have to respectfully disagree. FT funds have to be used so I believe drilling will happen in due course.
Comment by Jamie — August 26, 2015 @ 9:49 am
I will ask one question.If native negotiations put a hold on drilling which would have spent those Flow Thru shares on time,would a company get an extension by the gov’t that would take care of that provision?
Farshad is the important one here.If he speaks,it is trustworthy.DBV is the lead horse here,as they only have one horse in the race.He isn’t speaking…at all.
Regoci just added the Grizzly news as an extension to the Mexico news,not as the main storyline.And never mentioned that drilling is imminent.
Only the next news to come out of the Sheslay will tell us where we are going with this,as far as this year is concerned.
Comment by jim niles — August 26, 2015 @ 10:14 am
Jim, the answer to your first question is NO. Second, Farshad is NOT the only important one here. GGI is on the ground – no one else is at the moment – and a new drilling discovery in the area could be just around the corner once the drill bit starts to turn at the Grizzly. It was a mistake to underestimate Farshad in 2013, and anytime since. Don’t underestimate Regoci.
Comment by Jon - BMR — August 26, 2015 @ 10:38 am
Would anyone touch $JNUG @$6.00ish?
Comment by BigRig — August 26, 2015 @ 10:46 am
Jon, Farshad since 28 months prove his ability with several financing in a very wrong market …… Regoci proved absolutely nothing!
Comment by Guy Delisle — August 26, 2015 @ 11:37 am
I agree Jim Farshad is the important here…..It’s DBV which is taken with the blockade !
Comment by Guy Delisle — August 26, 2015 @ 11:41 am
Guy, re-read my comment. I wasn’t criticizing Farshad. In fact, I complimented him. My point was in reference to Jim’s comment. What I stated is that Farshad is not the ONLY important one here. There are 2 companies active in the district at the moment, and others with an important stake. GGI is currently on the ground. That in itself is hugely significant, particularly once the drill starts turning which I suspect it will. GGI could be the one that suddenly ignites something, anything is possible.
One has to think in terms of the district and put the competitive crap and egos aside as far as the individual companies are concerned. There has been too much of that the last 2 years, and personally I’m fed up with that stuff.
What’s good for one company is good for the others, and what’s bad for one company hurts the others too. Every shareholder in DBV, and I’m one of them as well, should be rooting for GGI. And Garibaldi shareholders (I’m one too) should be rooting for Farshad to get back at the Hat ASAP.
Anyone who thinks the above doesn’t make sense, I’d love to hear why, and we can have a really interesting debate here.
Comment by Jon - BMR — August 26, 2015 @ 11:58 am
As a major shareholder in DBV and a very small one in GGI in comparison to DBV, I’m rooting for GGI to ignite the region if they are first to be drilling! If they start drilling without any issues from natives, it will probably give the green light for DBV! The sooner the drills start turning for GGI the better for DBV (and other players).
Still waiting for DBV to update shareholders!
Comment by D4 — August 26, 2015 @ 12:22 pm
I agree with Jon. Cheerleading for one Sheslay valley company whilst badmouthing its neighbour(s) is foolish.
Yeah we get it, you bought one of GGI/DBV/PGX so that one (and only that one) is gonna be the next Voisey’s Bay discovery.
Go DBV, go GGI, go PGX.
Comment by Concerned Citizen — August 26, 2015 @ 12:29 pm
After 7 weeks of blockade is the winner is Tchad Day ?
Comment by Guy Delisle — August 26, 2015 @ 12:43 pm
Chad Day is definitely not the winner here, Guy…he took a big gamble in early July and it backfired on him and has caused him a lot of grief, perhaps more to come.
Comment by Jon - BMR — August 26, 2015 @ 12:54 pm
So far it looks like Chad Day is he winner. His goal was to prevent drilling and its been stopped for 7 weeks. Almost 2 months later and DBV is still “exploring its options.”
Comment by D4 — August 26, 2015 @ 1:09 pm
It will be interesting to see what Chad will do if GGI starts drilling in the next few weeks . Go for it GGI ,the sooner the better.
Comment by Les — August 26, 2015 @ 1:14 pm
Les – Good comment, I’m with you on that, let’s get going!
D4 – Exactly what the point I was making last week.
Before you know it, the snow will be falling in northern BC at the Hat property. If Farshad is going to start drilling it better be with multiple rigs (min 3) to make up for lost time. With a bit of luck a major will be behind the financing to support drilling commencement. (on my wish list)
Comment by vepper — August 26, 2015 @ 1:26 pm
Vepper, things need to moving for various reasons but keep in mind that the climate in the Sheslay district is quite a bit different than other parts of northern B.C……protected by the mountains to the west, snowfall amounts are much, much lower than Stewart to the south for example….drilling can go year-round up in the Sheslay district…of course, Farshad’s problem is that he has filled all the creeks at the Hat with timber (lol), according to Chad, so he’ll have to either remove the timber the Tahltan cut or get water supplies shipped in from Tahltan headquarters at Dease Lake (lol again).
Comment by Jon - BMR — August 26, 2015 @ 1:49 pm
Jon
definitely agree with you about rooting for both companies what is good for one is good for the other imo,bought GGI early on and not DBV, always felt when DBV was having success that was good for GGI too, I can’t imagine that Farshad and Regoci don’t pick up the phone and talk from time to time…
thanks for all you guys do to keep us all informed…
Comment by Greg — August 26, 2015 @ 4:36 pm