China Tech: The Nightmare Could Be Ending
The last year for Chinese technology stocks has been nothing short of a nightmare. But now there could be signs of a turn in the KraneShares CSI China Internet ETF, which holds key names like Tencent and Alibaba.
The 8-day exponential moving average (EMA) was under the 50-day simple moving average (SMA) since March. But last week, that faster-moving line rose above the slower one for the first time.
Next, KWEB has stabilized around $45. This was near the high in June 2015 and the bottom of its consolidation area in April-May 2020, immediately before a 110 percent rally.
Third, notice the rounded bottom with a low near $46 in July, a deeper low under $44 in August and then a higher low near $45 again this month. That lack of a lower low suggests prices may have bottomed.
Fourth, KWEB ended September with an inside week and began October with a bullish outside week. Such price action is also consistent with a trend reversal (in this case, a six-month bearish trend).
Finally, the Chinese yuan is rising the most against the U.S. dollar today since the first session of the year. It seems to result from confidence that the property-developer debt crisis is easing. While it’s not directly related to the country’s technology sector, renewed strength in the yuan would also provide a tailwind for KWEB.
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The 8-day exponential moving average (EMA) was under the 50-day simple moving average (SMA) since March. But last week, that faster-moving line rose above the slower one for the first time.
Next, KWEB has stabilized around $45. This was near the high in June 2015 and the bottom of its consolidation area in April-May 2020, immediately before a 110 percent rally.
Third, notice the rounded bottom with a low near $46 in July, a deeper low under $44 in August and then a higher low near $45 again this month. That lack of a lower low suggests prices may have bottomed.
Finally, the Chinese yuan is rising the most against the U.S. dollar today since the first session of the year. It seems to result from confidence that the property-developer debt crisis is easing. While it’s not directly related to the country’s technology sector, renewed strength in the yuan would also provide a tailwind for KWEB.
TradeStation is a pioneer in the trading industry, providing access to stocks, options, futures and cryptocurrencies. See our Overview for more.
