Is it time to buy into Chinese stocks?
SHANGHAI, Jan 20 (Reuters) – China lowered mortgage lending benchmark rates on Thursday as monetary authorities step up efforts to prop up the slowing economy, after data earlier in the week pointed to a darkening outlook for the country’s troubled property sector.
The cut to the one-year and five-year loan prime rates (LPR) followed surprise cuts by China’s central bank on Monday to its short- and medium-term lending rates and came days after the central bank’s vice governor flagged more moves ahead. Link to full story
If you accept the fact that US stocks and crypto is weakening because the US is tightening interest rates then yes, it is logical to assume that China easing at all levels is bullish for Chinese stocks.
What do the charts suggest on some larger Chinese ETFs?
We are looking at the three-year weekly charts because we are first approaching this as a macro trend for accumulation. In a second step, you can do is to zero into the shorter-term charts to fit the chart to your time-line and price goals. Email if you want help or coaching.
Krane Shares (KWEB) $35.60
Note the large increase in volume coming into this ETF. Yes, there is accumulation of this theme. There is the potential the stage four declining chart pattern is ending.
Direxion Daily FTSE China 3X Levered Shares (YINN) $8.13 -(Volatile and built for traders)
iShares China Large-Cap ETF (FXI) $36.71 FXI is the most popular ETF option for to the Chinese equity market.
YINN, levered 3X and built for trader shows accumulation in the Volume. FXI is still lagging behind the YINN and KWEB charts in showing accumulation.
This leads us to think we are early on a price move, but China reliquefying through easing rates is a theme being taken seriously.
Let’s add one big and well known China company chart to our viewing pleasure: Alibaba (BABA) $118.99
BABA is showing early days of basing chart pattern (stage one chart pattern). MACD and CMF are improving. RSI verses the market is off its lows but not yet showing a sign of out-performing the market.
Our conclusion is that yes China’s interest rate easing at a time of USA interest rate tightening, is a investable play. We would suggest a slow but steady start to accumulating positions that fit your investment style – Trade, Investor Speculator. My work is usually early in finding new trends. Occasionally I am spot on but more often than not I am early.
Off Topic: “The Untold Truth About Building Wealth” 42 minute video Motivational presentation
Excellent motivational speech by Patrick Ben David, Iranian immigrant who came here at age 8 with his family. Did not really think about accumulating family or wealth until in his late 20s – now 43 and has an estimated worth is $115 million. It helps get the ‘desire’ to succeed juices flowing.
Written Feb. 20, 2022, by Tom Linzmeier editor LOTM Newsletter.
LOTM Research & Consulting Service
* An account related to LOTM holds a position in this security.
Neither LOTM nor Tom Linzmeier is a Registered Investment Advisor.
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