The first two charts are the daily timeframes for CTRP and QIHU, two hot money China stocks. QIHU reports earnings next Monday. But headed into the rest of this week you can see both stocks are flagging high and tight, legitimate long trading candidates for further upside momentum, with impressive buy volume to boot.
In due time, however, a major rotation into the global complex will require more than just a few Chinese appetizers. Instead, we will need to see major industrial players like Caterpillar, and especially the emerging markets as a collective whole, participate.
To that point, consider the third chart, below, of the monthly timeframe for the EEM emerging market ETF.
Stretching back several years, you can see the significance of the $45 level. And the best hope for bears here is that it remains firm resistance. Above there, and all of a sudden a fresh wave of badly beaten-down stocks in the coal and steel sectors, among others, become viable candidates to follow everything else higher.
Watch it.
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