11/13 Daily Market Note: Has A Short Window of Opportunity Appeared for China Internet and Hang Seng Stocks?
11/13 Premium Strategy Note
Note: Make sure to share my content with friends and family as I will continue to do my best to help the folks navigate this market. Last week, we issued a few continuation ideas such as AMAT and IBKR to keep pace with the market’s rally. We also discussed a 1-day counter-trend setup which materialized. In this note, we talk about whether China is an opportunity with Biden-Xi set to meet again this coming week to repair constructive relations.
Hi Folks!
Welcome back to another exciting week – this morning in our Pre-Market – we indicated our lean/intent that China (via KWEB constituents) was getting ready for a bounce. Make sure to join our Whatsapp Group if you’re an existing member as I provide pre-markets Monday-Thursday. Let’s get into today’s action.
In a gesture aimed at cementing improvement between China and the U.S., China is weighing to allow (after several years of a freeze) the Boeing 737 Max to begin commercial service again after a halt back from 2018. Boeing (BA) saw a gap-up in the pre-market of around 4% to boost the Dow Jones, and the stock being able to hold its advance (as of this note) is an indirect sign that China’s KWEB ETF Constituents may see a relief rally this week in the context of a very challenging macro environment back in the Mainland. In terms of how I will position for this, details will be discussed below. The coming APEC meeting is a rare opportunity for buyside traders to fend off short-sellers in China stocks that have pressured the Hang Seng to demonstrate structural significant underperformance relative to the S&P 500 and Nasdaq.
China stocks trade with a certain type of cadence where a rush into risk-on assets can be done at a furious pace while an unwind (dump) increases its probability with every gap-up/day of advance. This sector continues to frustrate the majority of investors interested in this sector, but this need not be the case if one has the right vehicle, statistics, and mindset composure towards the sector.
After the large U.S. rally, I am Neutral on U.S. Stocks and tactically positive on China. Positioning strategy below.
Context & Statistics to understand Positioning…