A trend line is a stock chartist's way of tracking the health of trends in stocks, currencies, and commodities (you can read the excellent Trader Vic book for the full story on them). The theory goes, once an overpriced, popular asset "rolls over" and breaks through its trend line, it's a good time to short the asset. It's a sign the trend's upward momentum is broken.
Today's chart displays the year's trading action in the Shanghai Composite Index. This is the most widely used gauge of Chinese stocks... and it's close to exhibiting a classic trend line break.
We can't know if this new decline and trend line break will turn into a big wipeout... but we can say that every large decline begins as a small one. If you've been itching to bet against Chinese stocks, the market is getting on your side.
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