Tackle Today: About that China Stock Crash
August 25, 2021
≈Here’s a watered-down way to play≈
Traders,
Chinese stocks haven’t been left out of this week’s market rally. The Chinese Large-Cap ETF (FXI) is up 5.5% over the past two trading sessions. The daily chart also has a potential double bottom pattern trying to form with support at $38, so bulls have a shot here.
Here’s the problem. FXI is still 25% off this year’s high. And the weekly trend is bearish. From my perch, FXI goes in the too-hard bucket. There are bigger forces at work that I have no edge forecasting. If you want a more watered-down way to play China, though, I suggest taking a good look at the Emerging Markets ETF (EEM). Approximately 33% of the fund is exposed to China. The other 67% is spread out across a handful of other countries, including Taiwan, South Korea, India, and Brazil, to name a few.
Here’s what I mean by watered-down. While FXI is down 25%, EEM is only 12% off its peak. The Chinese drama is partially diversified away by the bevy of unrelated holdings.
#TeamTackle
Chart of the Day
The Magazine Cover Indicator
China’s renewed regulatory attacks on public companies have been stealing headlines and finally made their way to the Economist magazine cover. Eager bulls might point to this as a contrarian signal that the bearishness has reached the mainstream. If you’re one of them, tread carefully. The chart of FXI leaves much to be desired.
Video of the Day
Queen’s Court
In this week’s edition of the Queens Court, the coaches bring separate trading picks for Coach Emily to review including Boston Scientific and United Health. Will she accept the trade ideas or will she lop off the coaches heads?
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