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Shorty, we’re going to China!
The high momentum China stocks are on fire this morning, namely ONP RINO HEAT CMFO CCME. Perhaps what is most bullish about the action in those names is that not they are merely bouncing from oversold conditions. Instead, they are breaking out of multi-week, or even multi-month, bases.
I am fully aware that the temptation here is to proclaim, “The high beta, small cap China names are running fast and furiously. Therefore, the market is topping out because of such complacency with respect to risk appetite.”
However, that type of mindset would have seen you shorting this market last week, when the cloud-computing and data storage names were cratering, yet the broad market was holding up sturdily. Remember, it is not always WHAT the market is doing, but HOW it is doing it. Thus, price action, volume, and general principles of technical analysis/mass psychology are going to trump old Wall Street axioms.
In the case of the momo China stocks, as seen in a few examples of their charts below, I believe these are bonafide breakouts, as opposed to one-day wonders. Again, these stocks are breaking above sound, healthy bases on strong buying volume. From my vantage point, that type of action does not signify the irrationally exuberant behavior by market participants that you would expect to see at a market top.
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great stuff chess
Thanks Chess. Loving WYNN, thanks again. Also picked up some RINO, lucky day for me. Appreciate help from RC and you. Interesting, I am seeing some of the same trades as you. I have had some success with lotto picks cbak and chng. Very risky but large upside, currently bought some cbak. Holding RINO and WYNN.
These are times not to forget!!! Glad for your success.
Hey CnW,
Very good analysis, I also believe China is starting to enter into a trending market (above 2700). How will you get exposure in the chinese equities?? I don’t think you currently have any chinese holdings. Would love to know your strategy.
Regards,
VC