Move the 401k to ChinaGrowth in China will buoy Global growth for at least the next year. Looking for an entry on the China trade is a smart move imo.
FXI trade ideas
Bullish movement on $FXI after multi-year lowsHere we can see AMEX:FXI potentially breaking out of a multi-year downtrend after a 2021 top. The stock formed an inverse head and shoulders pattern while touching support and bottoming at about $20.84. A large cap ETF such as this could be a very low risk trade heading towards the latter half of the year. Personally, I will be waiting to buy after it starts trading above the 50SMA. You can see it is currently above the 20, and now it is working its way to be above the 50 with significant volume this week.
Potential China Inflection: FXI ETF:
Conclusion: FXI has reached a potential inflection point. The outcome of the current technical setup is likely to define the direction over coming months, and will likely result in significant low risk trading opportunities.
FXI, is the China Large Cap ETF that holds the 50 largest large cap Chinese stocks trading on the Hong Kong exchange. FXI is currently in the process of making a secondary test of its 2022 low. Either a successful test leads to a show of strength, or a failed test creates a show of weakness. Either outcome has the potential to produce a meaningful directional move offering multiple trading opportunities. This is precisely the kind of setup or juncture around which I like to build agnostic trading plans. I will have a trading and risk management plan in place to take advantage of either outcome.
In 2021, the market began a vicious decline (-60%). The decline from the February 2021 high occurred on rising volume and wide price spread (suggesting strong handed selling). The move was clearly impulsive.
A temporary selling climax developed (arrow). The minor climax produced a small automatic rally that quickly ran into resistance. The market then devolved into a 4 month show of weakness. This zone now represents significant resistance.
The show of weakness occurred on wide price spread and relatively high volume, before potentially developing a complex selling climax (SC) at 20.87. Note that, while in this perspective the SC appears complex, it appears more traditional in the daily perspective.
The automatic rally (AR) lasted 4 months and found resistance in the same zone that turned the market lower in March of 2022.
After testing the resistance, the market began setting back toward the selling climax low (20.87). Note that during the most recent decline, the angle of decline has been shallower. The shallower angle and moderate volume suggests far less supply entering than on the prior decline.
The solid expansion of volume around the recent low (ST?) suggests strong handed buying and that the secondary test may be complete pending a show of strength.
As the market has advanced from the ST 20.87 low, volume and price spread have been declining. While supply seems limited, demand is still lacking. Odds of a setback to test 20.87 again are fairly good.
I think it’s premature to conclude that the secondary test is complete. But if the market begins working its way above the downtrend that is defining the potential test (A-B), particularly if volume and price spread expand, it would likely signal a completed test. This would allow me to begin utilizing bullish setups with a high degree of confidence. Conversely a developing trend below the support would allow me to begin utilizing bearish setups. Either way, the potential for a significant move is high.
I prefer secondary tests that are well separated in terms of time and that come close to fully retracing the climax structure. This structure certainly qualifies in both respects. I would prefer to see a deeper cut toward the 19.81 low, but 20.86 is close enough.
And finally, many of the topics and techniques discussed in this post are part of the CMT Associations Chartered Market Technician’s curriculum.
Good Trading:
Stewart Taylor, CMT
Chartered Market Technician
Shared content and posted charts are intended to be used for informational and educational purposes only. The CMT Association does not offer, and this information shall not be understood or construed as, financial advice or investment recommendations. The information provided is not a substitute for advice from an investment professional. The CMT Association does not accept liability for any financial loss or damage our audience may incur.
China Recovery LongWith China in the early recovery stage of the business cycle it may be time to consider a trade to the long side.
The FXI is currently trading at the POC line on the 1 year fixed vol profile. We see a series of higher lows after bottoming on January 22, which is also a prior low back in October 2022.
The OBV confirms the uptrend and the DI+ recently cossed D- from bellow. I anticipate the ADX rising in the near term to confirm the trend strength.
The circle highlights a confluence of points where price is trading at the POC, testing the .5 fibonacci level and breaking out of the wedge.
Looking for a close over 24.14 with increased volume.
Targeting 27.42 & 35.17
Stop: 23.50
BTO* FXI April 17th 20.5 Monied Covered Call... for a 19.90 debit.
Comments: Looking to establish a position in FXI over time on weakness via monied covered calls to emulate selling a 25 delta short put, but with built-in downside defense via the short call and to take advantage of call side IV skew.
The underlying also has a dividend that pays out in June and December, but with somewhat variable amounts and with the Dec distribution being far larger than the June one (e.g., 2022: June .145929; Dec .593146; 2023: June .154374; June .149 (special); Dec .6074). Consequently, I 'd be more interested in grabbing the Dec than the June, so may modify my strategy slightly to allow for the grabbing of those by selling an OTM covered call in those expiries instead of ITM so that my shares don't get called away before the divvies drop into my account.
I have an order in to open for 19.90, but may penny up to get a fill just to get a starter position on.
Metrics:
Buying Power Effect/Cost Basis in Shares: 19.90
Break Even: 19.90
Max Profit: .60 ($60)
ROC %-age: 3.02% at max, 16.2% annualized; 1.51% at 50% max, 8.10% annualized.
* -- Buy to Open
I betcha tree-fiddy that support line cracksThe direction of the market is as the direction of the economy, is as the direction of employment, is as the direction of the total population.
And the CCP will continue... until morale improves!
EM Equities Bottom Call
Valuations are attractive on an absolute and relative basis.
Cross-asset breadth for EM assets (stocks/bonds/FX) making a sharp move higher from washed-out levels.
EM central banks are collectively pivoting from rate hikes to cuts, which supports EM assets.
China is moving towards a larger stimulus as the property downturn deepens and the economy slows further.
Technically, the chart shows a bullish RSI divergence and a double bottom 'h' pattern occurring near the apex of a massive 10-year symmetrical triangle.
Extreme and lingering pessimism marks a reset in sentiment and a contrarian signal.
Market consensus: The Fed is done with rate hikes and the USD has peaked.
Note: Despite cheap valuations, clear downside risks are intensifying as stimulus-hesitance and bad karma continue.
In summary, given the macro catalysts, valuation story, sentiment reset, and promising technicals, an inflection point is appearing. While I refuse to invest in China for personal reasons, it would be wrong to ignore the upside and indeed what is different this time.
FXI - Poised For UpsideFXI appears to have put in a double bottom and may be setting up for a bull run. At the very least, if the current formation is just part of a corrective flat wave, then we can expect the coming C wave to equal the A wave, putting FXI at 33.
Sentiment is horrible for the China markets. I.e., screaming buy
27 year low, China bottom is being painted, time to go long.China has been hammered over the years but I believe the bottom is in, and the super power will rebound.
We had a double bottom from the Nov 2nd 2022, so looking for a multi month long here.
Is China back on recovery ?www.scmp.com
www.reuters.com
www.scmp.com
With a crippling property market (www.businesstimes.com.sg), lower than expected domestic spending, stock market make a U turn barely after a small recovery, fund managers flocking to Beijing to meet top officials to get answers, ongoing US-China trade sanctions, never ending finger pointing at China on Russia , Taiwan, Europe matters, is China economy really back on recovery ?
Well, nobody really knows since the official data released by the Government is also interpreted differently. However, the weekly chart offers some intelligent clues. We are still on a downtrend from the weekly chart and now lies a potential reverse Head and Shoulder pattern. With the latest announcement by the government to the world, I expect the price action to break out this/next two weeks and continue rally.
Note that the recovery is not going to be a 90 degrees sharp rise but sporadic and unevenly distributed amongst different sectors with AI being the top priority for the country moving forward.
Those who wish to buy/accumulate into this ETF can prepare yourself and buy in tranches -
10% now, 20% upon breakout and so on and so forth.
Please DYODD.
$FXI China Large Cap ETF Double BottomAMEX:FXI , China Large Cap ETF, shows a Double Bottom pattern. Wait for a breakout of the parallel downtrend or a stop below the double bottom. CHINA IS PLANNING A STOCK MARKET RESCUE PACKAGE BACKED BY $278 BILLION DOLLARS.
FXI - ETF - China Large cap companiesOpportunity to buy and hold, is its a good option if you are interested in diversify geographically your portfolion introducing Chinese companies.
$FXI China at Key FibChina Large Caps are a Key Fib, as the Dollar Weakens and US looks to head into recession risk. China Rotation could be in the books, or else diversification away from US equities only investing as a result of onshoring. Diversification and EM/China could play a role in balancing an overbought and US only portfolio as Jobs Opening Data remains weak, and US equities continue to rise.
FXI Capital outflowsWe track the performance of the FXI funds. Outflows are increasing. Graphically, the price is targeting the previous low.
Big trouble in Big ChinaChina ETF has broken down. All time lows are not far away, so the bottom could be a deep one.
The Elephant in the RoomUnless you are hiding in the cave (which is a good thing to do from time to time), you must have read about the news in China.The much anticipated fanfare about the post Covid did not take place much to the disappointment of both hedge funds and retail investors. In short, the Chinese are simply not spending as much as we thought. Government are doing what they can to help shore up the economy but it takes time for confidence to come back. The property market is still in a doldrum and many Chinese have suffered in this area. Perhaps, they are less inclined to invest in the stock market now.
We know the Chinese are savers so I believe this Covid saga has brought much fear, uncertainty about the future for them so savings become a go to route, increasing their savings to prepare for uncertain times ahead.
If you have invested in China, example the FXI ETF since 2020, then you are likely to be in the red. (just like me). That is why , I advocate the importance of geographical diversification. US market on the other hand has been on a good rally mode and the overall loss can be compensated here.
I am selectively choosing those good managed companies and align with what the CCP direction and doing more homework and increasing stakes in certain US tech stocks as it continue to ride the trend.
When will China turn around? Your guess is as good as mine. I believe the government will continue to pump support (maybe not as aggressive as before) to help the economy and Q3 will be a important time frame to watch for it to pivot. Almost all the negative news are over now in China so the downside is low while the upside is much higher over the long term. FXI has to remain above 25 price level , if it breaks below, I will be more cautious as it is likely to revisit its previous low of 21 in Oct 2022. It is possible to make another low or new low before it reverse its trend. So, please do not invest all your money just because it is at bottom now. One will never know how long the low can stay and if you have limited capital, it makes more sense to diversify.
China still too big a market to ignore Hong Kong market has lost about 45% from its peak on 16 Feb 2021 (more than 2.5 years ago) while China has lost about 55% as well. Looking at the dwindling red candles over the past few weeks, it is possible the selling pressures is almost over.
For the patient investors, you can wait for the breakout to happen first before deciding to go long. This could be a long haul as we hope to see investors slowly gaining more confidence in the stock market and start to invest again. Hopefully, the property market which is still in a doldrum has affected many people who strongly believes in the ever rising property prices. It may last for years but eventually, it has come to a stop and those who caught off guard and went a little too greedy with excess speculations got themselves burned with higher interest rates and could not service the mortgage and has to force sell the properties at a loss.
As one of the most hated and uninvestable country now, the opportunities for its upside is tremendous and to invest in it, one must be patient. Please DYODD
an alternate 5-wave countI revisited the wave count of FXI yesterday and came out with an alternate 5-wave count compared with my previous analysis . The trend still remains bearish and there is no modifications in the target price.
In this alternate count, we have a simple wave i, wave ii and wave iii as depicted in the graph and an expanded triangle as wave iv that consumes considerable amount of time and form compared to wave ii.
That set the stage for an extended wave v with the target price in the range of 18-20. Wave 2 has reached 50% of the retracement of wave 1 in this extended wave v.. Whether wave 2 is a simple zigzag or flat remains to be seen. Using 1.618 of wave 1, wave 3 will be in the price range of 20 before retracing to 23 as wave 4 as shown in the chart.
The series of measures and relief packages Beijing has come up with in the recent months to buttress the economy and property sector will not be able to deter the price drop of FXI, at least not in the foreseeable future.
Bearish on FXII came across an article recently about bullish on FXI. I had my doubts since I am not optimistic on the chinese economy as well as on the strength of RMB.
So I decided to take a closer look at this etf index fund that tracks the movement of large cap equities in China.
As depicted in my chart, we are now in the 5th wave of an impulsive wave that begins in Feb 2021. And I believe we are now in the 5th wave or close to of an expanding ending diagonal. Yes, expanding ending diagonal are ubiquitous. I posted an article two days earlier on gold on expanding diagonal.
The target price for this 5th wave descent is in the region of 18 to 20. And it does not bode well with the Shanghai Composite Index (SSE) as it also tracks large cap equities.
Is China Dragon about to fly again?After a 61% correction and a 59% rebound, now Chinese big techs are getting out of consolidation after 22 weeks and breaking above the resistance line at the same time with a +35% above-average weekly volume!
August could be a very fantastic month for the Chinese big cap!
Triple bottom pattern found on FXI ETFCould this be the bottom for the China market ? Let's take a look at this ETF.
It has recorded a nice triple bottom recently after the Central Government made the announcement (read here )
Further evidence - They asked listed companies to buy back shares. Alibaba did that !
Chinese Factories are still open and production running despite spike in Covid-19 cases !
This is key since many components parts are manufactured in China from smartphones to clothing and shoes , fashion worldwide.
China's ongoing emphasis , R&D and focus on the Tech sector ! Read here and here
And lastly, if you have to choose a country to invest in, wouldn't the recent sell off between 50-80% drop from the peak in China market an attractive proposition ? Of course, choose the right company with good fundamentals to invest in.
Please DYODD.
