OPENING: FXI JAN 27TH 32.5/35.5/35.5/38 IRON FLYOut of a Brazil play and into a China play ... .
Metrics:
Max Profit: $153/contract
Max Loss: $147/contract
Break Evens: 33.97/37.03
Notes: Will look to manage this at 25% max.
FXI
FXI OppertunityChina had a monstrous collapse in 2015, after that rally it is now showing some short term weakness. The problems they face are currency, slowing growth, and house prices.
I believe that house price may effect stock prices but it shouldn't be something that effects the whole market because the problem is evident, when we know about the problem we protect against it making the problem minor and we can see that being addressed.
The slow growth is concerning but anything over 3% is still faster than we will get here and they still have plenty of room for interest rate cuts and stimulus. Much of their debt is held in their own currency so that is manageable.
The biggest concern is there currency situation, however once again everyone knows about it therefore it is being addressed thus not an issue.
Technically there is a large invHS for a long set up. This is a position for a couple years to trade around.
Copper's Parabolic Move UnstableThere is no doubt copper's move is substantial as chart chasers crowd on a few group think narratives:
Inflation is around the corner. Is it? Headline inflation in the United States in 1.47 percent. To put that in perspective, it's down four percent from July 2008 highs of 5.4 percent. To add further perspective to that, inflation is cyclical. It has risen, from previously declining, into every U.S. recession (except two) is seven decades. Each of those bouts ended up in a deflationary recession.
Copper prices, and the narrative of higher inflation, is coinciding with a much stronger DXY. Due to global central planning to weaken their respective currencies, the dollar has remained rather strong. Either the dollar plummets or copper does. Unless the greenback breaks through 92.50, the 2011 bull market continues higher, pending more Q.E. from the Federal Reserve.
China is growing. Not really. Internal data suggests China is growing less than half of its official growth figure. Fiscal stimulus is a possibility, but the Communist government has a long-standing affective of pumping liquidity and generating fiscal deficits to inflate on asset bubble to another.
In a note from July 2013, I said "The excessive liquidity in China has led to a huge redundancy in investments and speculation, and this has contributed to excess capacity in both manufacturing and infrastructure. This inefficiency of channeling the free-flowing liquidity undermines China's development." This will continue. The People’s Bank of China has increased net liquidity to the financial sector by a staggering +2,022% year-to-date.
The commodity burst has finally reached a bottom. Really? Too early to tell, especially if growth continues to slow.
Price discrepancy is way out of wack. With a z-score on the daily and weekly of over 2.5, price will have to come down. RSI is at 87, while the stochastic indicator is highly overbought. Copper does have momentum on its side, but near-term could see a pullback to 2.30 to consolidate.
Update on Copper - Breakdown ContinuesI already took a profit on my last position. I am adding to my position here. Dear old China should take us to our target.
FXI bearish-Weakens to retest 38.88 - July’s spike low nextFXI looks to retest July’s spike low at 38.88 which is also near the 200 week moving average currently at 38.69. Below there lies the 36.72 support (September 29, 2014 low) near the 76.4% retracement of the 32.58/52.85 rise. 41.55 should cap near-term bounces.
Outlook:
Short term: bearish
Long term: bearish
FXI update - short term bearish - 4/30/2015DO NOT LIKE what I saw. I believe it is heading towards 0.618 Fib ($45 level). Maybe wrong though.
FXI update - caution - 4/23/2015As of today's close, MACD turned negative, RSI trend line appears to be broken. Might be a good idea to take some profit off the table if they are not getting better in coming days (need be confirmed by short term price trend change).
GOOGL $543.25: Remains range-bound within a 14-month falling chaGOOGL has been range bound since posting the 615.04 record high (February 24, 2014), forming a 14-month falling channel as shown on the weekly chart. 529.00 serves as the immediate support (April 13, 2015 low) which may hold dips. Back above 553.27 (April 13, 2015 weekly high) is needed to suggest basing and extend strength towards 583.20 (March 2, 2015 high) beneath the channel upper bounds. However, a break below 529.00 would prolong the consolidation and offer scope for a retest of the 503.48 area (January 26, 2015 spike low near the channel support) which should contain the downleg.
Outlook:
Short term: neutral
Long term: bullish
XLB $49.83: Consolidates above a 6-month rising trendlineXLB has been holding a 6-month rising trendline (from October 13, 2014 low). If bulls manage to reclaim 50.38 (April 13, 2015 range high), that would suggest there is scope for further bullish momentum towards 51.01 (November 17, 2014 range peak) ahead of 52.22 (February 23, 2015 YTD high). The 49.38/48.59 support zone (which houses the the rising trendline) needs to hold dips. A breakdown would signal topping.
Outlook:
Short term: Buy on pullbacks
Long term: Bullish while the rising trendline holds
XLE $82.98: Formed a 5-month base on breaking above 82.43XLE formed a 5-month base over 71.70 on breaking above the 82.43 range ceiling (February 16, 2015), triggering further bullish momentum towards the next resistance levels including 85.97 (March 10, 2014 higher low) then 89.22 (November 17, 2014 lower high). The immediate support levels are 80.30 (21 week moving average) and 79.21 (April 13, 2015, near 200 week moving average) which should hold dips.
Outlook:
Short term: Buy on pullbacks
Long term: Bullish
FXI $50.25: Posted a new 7-year high at 52.56 near key retracemeFXI rallied strongly to post a 7-year high at 52.56 (April 16, 2015) near the 61.8% retracement of the 73.11/19.35 fall, before consolidating. The Technical indicators remains positive (on all time frames), reinforcing the bullish price action. Immediate support lies at 47.88 (21 day moving average, not shown on chart). Below rests 44.96 (April 1, 2015 low, near 55 day moving average) which should hold dips. If bulls manage to reclaim 52.56, that would accelerate the year-long uptrend towards 54.94 (May 1, 2008 lower high, near 76.4% of the 73.11/19.35 fall) next.
Outlook:
Short term: buy on pullbacks
Long term: bullish
FXI update - on 10 day MA support - 4/17/2015Held up pretty well today. However I will not be surprised if it retraces to 0.618 fib level. But it will be very impressive if it goes higher from there.
FXI update - neutral - 3/22/2015Still living in the rising wedge, with diverged RSI and MACD. Unless a break out, any gain will be limited, plus increased downturn risk.
FXI update - still some room to the downside - 2/1/2015FXI pulled back logically last week and should hit pink support and rebound. If pink support breaks, door is open to $36 level around the red support line. Note trend is still up but we need the pink support to hold.
$FXI moving higher but small correction possible 08-15-2014Price is still moving higher but momentum is waning. In the short term price may correct but no structural risk exists at this time
Is China going to lead emerging market?FXI/EEM ration still stuck in a range. But there is a bullish 3MA and 5 MA cross over, ratio is above 10 month MA, RSI appears to have formed an up channel. We will see if it can break the upper range in the coming months.
GOLD-CHINA-S&P500: last 10 yrs winner was GOLD. The next is ??When you look at ALTERNATIVES to the S&P500 for the last 10-years, these were two of them. Look at how well they have done.
Haven't you heard enough trash-talking about China and Gold? Isn't it amazing that we forget how well these markets have performed RELATIVE TO the S&P500?
The S&P500 is up 80% in 10 years (excluding dividends of roughly 2% on average). On a compounded return basis, that is roughly 8% total return per year for accepting volatility of 20% per year (on average), a 0% return for the first 6 years and a loss of 50% along the way (destroying your psyche).
What is your guess for the next 10-years? Please reply.
Click on "LIKE" if you already see your pick in the reply section!
Tim 7/4/2014 2:18PM EST
