Good morning,
Last week, we punted a China-focused Overtime to this week in favor of a more timely topic: Bitcoin.
Bitcoin hit a new all-time high yesterday, crossing $70k for the first time ever.
But one thing that couldn’t be further from all-time highs is China. In fact, of 28 global indices that I track, the Hang Seng and Shanghai Composite remain by far in the largest drawdowns from all-time highs, both still down more than 50%.
However, the country has bounced and some short-term trend measures are trying to turn higher. This week we’ll do a deep dive on China to see if it’s likely to catch higher and offers an opportunity to outperform in 2024.
Specifically, we’ll look at:
Technicals for major indexes and investable ETFs
Relative trends and the impact on EM benchmarks
Some of the largest Chinese stocks
Index technicals
Potential false breakdown in Shanghai Composite
The Shanghai Composite has rallied sharply since late January, leaving many calling the move a false breakdown below the 2022 lows. The rally deserves credit as the best since the October 2023 lows, but the index remains firmly below a downward-sloping 200-DMA. Getting up above 3100 would be more proof that we’ve seen the worst.
Hang Seng remains in a firm downtrend
The Hang Seng has rallied more than 10% from its January lows and is riding a short-term uptrend line higher. While not impressive in the context of the global rally, the index has notably held above its 2022 lows and a move up above 17,000 would complete an inverse head and shoulders pattern that targets 19,000. However, a firm downtrend like this should be avoided in the context of so many uptrends elsewhere.
ETF trends and the impact on emerging markets
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