NEARTERM OPPORTUNITY IN CHINESE MARKETS?

Today, lets look at China. Yesterday’s pop in their market is catching a few eyes. Is this the beginning of a turnaround?

At this juncture, I’m not fully convinced that China’s market is showing signs of a return to a bull market. But, it just may be showing signs of a tradable rally. My thoughts below…

China’s 3 step stimulus

“There’s a level of admiration I actually have for China. Their basic dictatorship is actually allowing them to turn their economy around on a dime.” Justin Trudeau

“a) Chinese policymakers are seeking to mobilize about 2 trillion yuan ($278 billion), mainly from the offshore accounts of Chinese state-owned enterprises, as part of a stabilization fund to buy shares onshore through the HK exchange.

b) Premier Li Qiang asked authorities to take more “forceful” measures to stabilize his country’s slumping stock market and investor confidence after the mainland’s benchmark CSI 300 Index hit a five-year low on Monday.

c)  China’s gaming regulator has removed from its website the controversial draft rules that crushed the sector several weeks ago, an action that caused industry stocks to spike.” BearTraps

Follow the Smart Money

 

Fade the Dumb Money

The chart below illustrates Sentimentrader.com’s collection of sentiment indicators all rolled into one “Optix”. Its largely a “Dumb Money” indictor, given that the index incorporates ETF data and small lot option activity. Anyhow, the indicator often lines up with an overbought or oversold Chinese market. Its fairly predictive of a move. Problem being, as you will note on the chart below, how big that move is can vary.

The sentiment optix recently signaled a “buy”

Short termed trading system

My short termed trading system suggests a potential neartermed trade for Chinese stocks. Hookups on the daily chart for the Bollinger volatility bands, stochastics and RSI…

KWEB is the benchmark China Internet/Tech ETF. Unsurprising that it looks the same as the broad index, given its weightings in tech…

 

Conclusion

Investors with a trading mentality might attempt a trade in the Chinese market while the excitement lasts.

 

Capitalism & Freedom making a comeback

Speaking of China & dictatorship…A free market, and a free society, makes a strong economy and confidence in our markets.

The pushback continues.

4 Comments

  • Tesla gone from magnificent 7.

    The Chinese EV makers have not only caught up with Tesla, but surpassed.

    Reply
  • https://www.byd.com/us

    Although Warren Buffet is selling, who has all the vertical integration taken care of, from minerals to the actual product sold in dealers? The car and the batteries. BYD. That’s who.

    Reply
  • February 8, 2024

    Presently calculating risk/reward of taking some off the table without impeding
    upward momentum.

    Reply

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