Slowdown in China

Bloomberg is reporting that China is going bust fast.

The International Energy Agency, the adviser to 28 oil-consuming nations, yesterday lowered its forecast for fuel demand in China, the world's second-largest energy user, by 200,000 barrels a day.

Sinopec is reducing output even as refining margins improve because of lower crude oil prices. China's fuel demand is falling as factories shut and airlines ground planes after the world's fourth-largest economy grew at
the slowest pace since 2003 in the third quarter. Stockpiles of petrochemicals including naphtha, a raw material for plastics, are at records.

What can we predict from this data? Lower prices for oil.

Today's rally was interesting, although not altogether surprising. Technical analysis would say that the market recently tested the recent bounce high (set on October 13) of 9400 by closing at 9600. It then promptly fell and closed yesterday at 8300, where it has support from the intraday low of 7800 set on October 12. We may be in a trading range here. However, I believe that the credit crunch is devouring the real economy like a plague of locusts. The fundamentals are really bad and getting worse, and stock analysts still predict a 25% increase in Q4'08 earnings. The recent trend of companies cutting their own estimates below analyst expectations shows the foolishness of these estimates.