China kicks off the new year with breaking news: the large cap index FXI ETF (FXI) performs a very important breakout. This is a clear signal: China will be in a bull market in 2018. Smart investors are positioned to profit from this strong bull market.
This is certainly no breaking news to our readers. We wrote several months ago that we prefer China’s stock market even above India (which has been our preferred stock market since 18 months).
China’s stock market started the new trading year with a strong rise. The SSEC index (SSEC) went up 1.3% while the FXI ETF on below chart rose 3.1%. As seen on the chart this is a break above the resistance trend which connects the mega top of 2007 with the one of 2015.
Interestingly, while we wrote in the past that financial mainstream media was very bearish in China, although the charts looked very enticing and bullish, it seems that the tide is turning.
Bloomberg now talks bullish about China, especially large caps in China. Note that the group of large caps is exactly the FXI ETF which is shown below; it is the chart about which we said
- one year ago (quoting ourselves): “we do not exclude a rest of the 2015 highs” when this ETF was trading 35% lower … it also the one;
- several months ago (quoting ourselves): “China’s FXI ETF looks incredibly bullish” when it was trading 15% lower.
Even CNBC is bullish now, quoting them on “Chinese stock markets will continue their trend higher over the long term despite recent dips caused by a regulatory clampdown in the country, one technical analyst told CNBC Monday.”
China in a strong bull market in 2018
It is not just because the first trading day of 2018 is strong that we are so bullish.
The bull market in China is evidenced by the breakout which took place today, and it has serious legs. A market breaking out of such a long term resistance trend is major news; do not underestimate the significance of this.
Moreover, the FXI ETF at 47.7 points (today’s high) is about to break above the 2015 top.
In market technical terms this is a secular breakout, and it took place on the very first day of 2018. A secular breakout implies that a bull market is starting.
We believe China’s bull market is now confirmed with this secular breakout. Our team researched China’s stock market, and identified a series of outperforming stocks. 7 High Quality Stock Tips To Ride China’s Long Term Bull Market >>