Some reasons why we're probably near a bottom with Chinese equities, +/- 10-20%
1) Since 2013, price has consistently respected the trendline - no different than a standard demand curve in economics. Trendlines are demand for price over a period of time and they work best when price revisits them often and shown to bounce after.
2) We also have the 200 week moving average that supported price during the correction of 2018 (President Donald Trump's trade war with China & the slowdown in global economic growth / concern that the Fed was raising interest rates too quickly) - The 200wma also supported price during the Covid meltdown of 2020.
3) 2018 and 2020 resistance is now structure support + notice the gap that was just recently filled during yesterday's waterfall decline.
4) Tencent has retraced about 76% from the former impulse low to high, which is a standard deep retest in a correction (61.8% - 76% on the deeper end).
5) FXI is the Chinese large cap ETF - notice it hit the 200 Month moving average and bounced. You could see that here:
No position yet, but may be interested in LEAPS. Easier trades out there IMO... but if holding, this is definitely not a place to sell. Expect chop and time to base. V shape recovery is also possible here (but unlikely in my view due to sentiment damage and headline risk).
There is no bottom for Chinese stocks! check out TAL and EDU
Lanmar
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@TrendTraderX, tal and edu are probably toast. I should have been more specific on large cap China. Either way, not a trade I'm interested in yet, but can't deny we're at interesting levels!
cyberluck
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@TrendTraderX, you can't compare Tencent to edu stocks.... Tencent and baba have their billions in so many industries and markets that these drops are retests worth buying shares outright for. edu stocks are supposedly getting assaulted directly by the government....
every time an industry got assaulted it only became stronger and things went up because you got real math in the algorithm that doesn't understand anything but how to go up or down based on triggers....the markets are about greed, they always go up even if a few fall off, this is why you should never invest in shitty stocks and risk too much because if they get beaten down, they have to survive, many fail. China can't afford for Tencent or baba to fail, they just want some of their cash and it's again an opportunity to buy low. That's like saying Google or Amazon are going down. Impossible as taxes and jobs are tied into these company that affect GDP and can send China into recession. The gov. won't allow that, they are trying to dominate the world...this is just shaking out the cash from weak hands. Patience is a virtue, in the meantime buy on the dips and if you're young, sit on these stocks vs. trade them....these are too good for shit trades unless you're selling puts.
DHD269
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More Chinese companies on the Chinese Communist Government hit list What a mess.
DHD269
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I think we'll see it go down to around 40.00 by mid August.
Lanmar
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@DHD269, could be. Not interested in buying either way
cyberluck
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I say instead of trades, buy shares outright at these retest levels...same for baba...too good to risk ending up with nothing.