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The FXI (ETF for China) finished last week in the green to put icing on what has been a tremendous run since September. Logically, you would think the high beta emerging markets would get sold hard in the midst of a sudden Fiscal Cliff panic, coupled with persistent weakness in the likes of Apple.
Instead, Chinese stocks continue to trade in their own world.
Even beaten-down Baidu, which has been in a seventeen-month downtrend, may be setting up for a long here. Note the weekly chart below (the first one), indicating a pullback to the 200 period weekly moving average. That is a major, very long-term reference point that had not been tested since early-2009.
However, that alone is not enough to justify a long. Instead, looking at the daily timeframe on the second chart, you can see a pretty clear-cut inverse head and shoulders bullish setup for a bottom. I would wait for a move above $103 to trigger a rally up to roughly $116.