Is the Shanghai crash over?

Yesterday the Shanghai bourse piled on 3% to break out of its recent trading range. Its chart suddenly appears quite bullish:

The downtrend line is broken and so is a more recent ascending triangle bottom.

I find it difficult to get excited by this for the simple reason that the SSE is a fundamentally useless entity. It does a terrible job of allocating capital, is of marginal importance at best as an economic indicator and is so distorted by government interference that it is useless as a price discovery mechanism. Those three points render it a absolute no-go zone as an investment option and anyone telling you otherwise should immediately be sacked.

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.