Nasdaq Composite looks surprisingly (frighteningly) like the Shanghai Composite

If we take a look at the Shanghai Composite index, which took a beating today, dropping almost 8.5%, and compare it to the Nasdaq Composite, the two indexes look surprisingly similar.



The first chart is the Shanghai and the second is the Nasdaq. I changed the time scale (the Shanghai covers 1 year while the Nasdaq covers 5 years), but the similarities are obvious (it just took the Nasdaq a lot longer to make a similar move). What is not the same is the fact that the Shanghai has cratered over the past few months, while the Nasdaq is still at or near all-time highs.

The Shanghai has suffered a 35% drop from its 5,200 high. Is the Nasdaq poised for a similar decline? We will soon find out!


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