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…
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.
- According to the World Economic Forum page, ten times more people watched Argentina’s new leader Javier Milei’s speech denouncing the Socialist WEF agenda than all other leaders combined.
- PM Justin Trudeau’s China-style invoking of the Emergencies Act against the Freedom Protests in Ottawa wasn’t justified, and infringed on Charter rights, Federal Court rules.