A couple of times each year, a theme presents itself which allows you to capitalize on not just one or two stocks, but an entire group of them. We are in the middle of one of those themes in China stocks as we speak. My friend Jeff Kohler, aka The Option Addict over at Trading Addicts has a dead eye for spotting rotation into this group specifically.
To verify what he is seeing, I consult Exodus Market Intelligence Platform to see how the Chinese Tech Industry group as a whole is performing.
The oscillator above is showing the industry bouncing off relative “oversold” levels where we have seen it do the very same thing a few times before (December, June and May of last year).
Further to that, China Stocks exhibit strong seasonality numbers going into April as we can see from the chart below showing the percent change in this group as compared with the $SPY.
Now that we have a group of interest it is time to get to work in picking individual names. Because I am very familiar with these stocks as I have been counting on them for years now to fund my wife’s expensive taste in designer shoes, apparel and handbags, I can rattle off names I have traded in the past quickly.
($SINA, $CMCM, $YY, $BIDU, $BABA, $CTRP, $CYD, $JD, $VIPS, $JMEI, $KNDI) and some others that are such awful companies I feel too dirty to type in their ticker symbols. Let’s take a look at what some of these names are doing and have done recently…
A. $YY
B. $CMCM
C. $CTRP
Sensing a theme here? Me too! This group has a tendency to play follow the leader, meaning what has happened to those names above, can and mostly likely will happen to a host of other China names of similar caliber. The task now is to find the next ones, while we continue to let these names work for us.
The next two I am looking at are $VIPS and $SFUN.
Any of them you are interested in or any other sectors / industries you see money rotating into?
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