NOTE: chessNwine’s Weekly Strategy Session has been published and sent out to members this week. I am confident that you will find this week’s version to be of tremendous value in your weekly preparations for the market. It is never too late to sign up at a very reasonable price, so please click here for more details about subscribing or even making a one-time purchase (the subscription plans offer much better value over time). As a reminder, members of 12631 receive the Weekly Strategy Session at no additional cost, as it is included in their membership.

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.

________________________________

________________________________