China Stocks Have Turned The Corner, Big Breakout Imminent (Technical Analysis)

Seekingalpha2023-07-31

Big bullish price action clues in HK/China stocksEach pullback within an uptrending bull market creates an opportunity to identify the next sectors and stocks that will lead the broad market higher....

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neo26000
·2023-08-01
I do not know how to read charts but my sifu has been telling our chat group about this since last week. And my sifu has over 90% accuracy track record.[Miser] I do fully agree with this report.
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Indices and leading stocks are also trading above their key moving averages, so I would like to establish that we are still in a bull market, despite the recent pullback.Things can, of course, change very quickly, but right now, my bias is to find sectors and stocks to buy. It has come to my attention that China stocks are basing really well. They showed high relative strength during the recent broad market pullback, and I believe they are poised to breakout higher.When the broad market is ready to resume its uptrend, China stocks are likely to lead in terms of momentum and gains.This is how I came to that conclusion:HK/China indices breaking outFor starters, US indices sold off aggressively to high volume the day after FOMC (27 July), as they pushed higher at the start of the session before closing the session red.The next day on 28 July, notice how Hong Kong and China indices shrugged off the overnight weakness to push to new swing highs. The Hang Seng raced towards its multi-month downtrend resistance and broke above its 200-day moving average.Daily Chart: Hang Seng (HK50) FuturesTradingViewThe China A50 did one better - it had already broken above its multi-month downtrend resistance a few days back. The index now broke above its 13,000 pivot, taking it out of a mini base.Daily Chart: China A50 FuturesTradingViewBoth indices look set to close the session more than +3% higher, which is a big green flag for risk sentiment, given the brutal overnight selling in US indices.China ADRs breaking out of big basesNow, we look at individual ADRs listed in the US.AlibabaThe key leader to watch is Alibaba (BABA). This stock had been plagued by regulatory woes surrounding Ant Financial Group, but recent price action shows that these concerns are behind the company.On 7 July, PBOC fined BABA on Ant Financial Group's regulatory violations. The stock jumped +8% in response on high volume, telling me that the market believes that the fine puts to bed this months-long saga. On 24 July, BABA chose to maintain its 33% in Ant Financial Group instead of reducing its stake, and the stock rose +4.5%.BABA has now broken out of a 3-month base, and is trading above its key moving averages (10, 20, 50, 200 day). I believe BABA is the main indicator on whether China stocks are ready to breakout higher. For now, the answer is yes.Daily Chart: BABATradingViewChina EV stocksThe China EV sector is hot - stocks like XPeng , Nio and Li Auto  are leading China stocks. They have already embarked on powerful uptrends, and were generally unperturbed by the volatile action in the US.XPEV recently benefited from an investment from Volkswagen (OTCPK:VWAGY).Daily Chart: XPEVTradingViewStrong uptrending action from NIO.Daily Chart: NIOTradingViewResilient uptrending price action in LI.Daily Chart: LITradingViewAll three China EV stocks have broken out of massive bases, which is a sign that they have turned the corner.Other leading China stocksAside from the EV sector, many other stocks (majority technology / software) have also broken out of big bases. As the saying goes \"the larger the base, the higher in space\".Pinduoduo  - broke out of a big multi-month base, supported by better than expected earnings.Daily Chart: PDDTradingViewMINISO Group (MNSO) - Retailer stock, that broke out of a big multi-month base and showing high relative strength.Daily Chart: MNSOTradingViewBaidu (BIDU) - A little bit of volatility and chop on the daily chart, but we may observe from the weekly chart below that this large-cap technology stock has been building a base since August 2021. Any breakout would be very powerful.Weekly Chart: BIDUTradingViewEHang (EH) - EVTOL stock, that has been trending higher. Very high short interest at 22% float. Stock has broken out of a big base.Daily Chart: EHTradingViewOverall, rotation is the lifeblood of a bull market. As long as the uptrend in the bull market remains intact, the higher probability trade is to go long.We can see different sectors taking turns to lead the markets higher - first it was FAANG stocks (FNGU), followed by semiconductor (SMH) and AI stocks. For the past few days, cyclicals like oil & gas (XOP) (OIH) (XLE) and banks (XLF) (KRE) have done well. Now, it looks like China stocks are ready to turn the corner and breakout higher.Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":203996022767832,"gmtCreate":1690840593920,"gmtModify":1690840600274,"author":{"id":"4131703342800552","authorId":"4131703342800552","name":"neo26000","avatar":"https://community-static.tradeup.com/news/11d50ec0d6202770a8629aa7f06a5d4f","vip":1,"hat":"https://static.tigerbbs.com/4c5ceab71416b120bab4604c0754b52a","crmLevel":9,"crmLevelSwitch":1,"idStr":"4131703342800552","authorIdStr":"4131703342800552"},"htmlText":"I do not know how to read charts but my sifu has been telling&nbsp; our&nbsp;chat group about this since last week. And my sifu has over 90% accuracy track record.[Miser]&nbsp;&nbsp;I do fully agree with this report.","listText":"I do not know how to read charts but my sifu has been telling&nbsp; our&nbsp;chat group about this since last week. And my sifu has over 90% accuracy track record.[Miser]&nbsp;&nbsp;I do fully agree with this report.","text":"I do not know how to read charts but my sifu has been telling our chat group about this since last week. And my sifu has over 90% accuracy track record.[Miser] I do fully agree with this report.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":7,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/203996022767832","repostId":2354375196,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"hasMoreComments":true,"newsSizeData":{"likeSize":51,"commentSize":1,"repostSize":2,"favoriteSize":4,"likeStatus":false,"favoriteStatus":true}}