Trend Signal Now: China Enters New Bullish Regime

Wednesday, December 11, 2024

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China's New Bullish Regime

China has entered a Bullish Momentum Regime in 2024, for the first time in many years.

The words "China" and "Bullish Regime" are not exactly things you see in the same sentence too often. But we're expecting that to change!

Have you seen the NEW FANGhai Composite Index that we created? This is the Index that you'll want front and center as we head into 2025.

Our China trades are working great so far. And I still think this is just the beginning of a major new trend.

Look at this chart of our FANGhai Composite Index working on completing this historic base, with Momentum confirming its new Bullish Regime (using a 14-day RSI).

All those Breakout Multiplier trades that I told you we put on just 10 days ago have all at least doubled so far.

Yes. That's over 100% return on each of the China trades they told us we were crazy for putting on.

I had to make sure you saw this note that I sent out yesterday walking through the new FANGhai Composite Index, why we created it and how we're going to use it moving forward.

Here's the full note:

The FANGhai Composite Index

Let me set the stage for you, to help you understand the significance of this new Index, and then I'll get into the details of what's in it.

First, it was the momentum thrust. This was what really put China on our radar. In late September, we saw the biggest momentum thrust in the history of the Chinese Stock Market.

Here's one example that shows the best week ever for the China ETF $FXI:

There are other examples, like best day ever in China, best 2-days, and best periods relative to Japan, as well as other Emerging Markets.

We've never seen anything like what we saw in September. And historically these sorts of momentum thrusts, particularly at these extremes, come early in bull market cycles, not near the end of them.

We know. We have the data.

And then after a month of consolidating those initial gains, we were heading into a US Presidential Election that had all the makings of a Trump landslide victory.

"If Trump becomes President", so the narrative was at the time, "then it's bad for Chinese stocks".

But was it?

At the time I was wondering, what if Chinese stocks don't fall after Trump wins the election. Then what?

And they didn't. They held in just fine.

So we bought them. We practically bought them all.

Here's what that looked like at the time - less than 2 weeks ago:

Since then, these China stocks have ripped.

Here's a snippet taken directly from the Trade Alert that went out to Members of Breakout Multiplier on Monday taking profits on some of these trades

If you're new here, Breakout Multiplier is the system that was created to take the best of ASC Research, and then execute on those trade ideas using a very specific, repeatable, and easy to execute strategy.

Here's what that looks like:

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December 9, 2024: We paid $0.63 for the $FXI 2/21 $33 calls; now they are worth around $1.80 trading at-the-money.

$TAL 2/21 $13 : We paid $0.35; they hit $0.60 this morning. We're right there, so be ready.

We bought the $JD 1/17 $40 calls for $1.50; now they are at $3.25 and about a dollar in-the-money.

$TME 3/21 $15 calls : We purchased them for $0.45; currently at $0.90.

This is the ideal time to take half off the table on a double and secure our positions. This technique lowers your cost basis to zero, so you have no chance of losing money on the trades, even if they move against us from here.

Now we can enjoy a "free ride" on the remaining calls with up to three and a half months for them to keep working.

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JC Here.

Listen, these we are all homerun trades and they moved in our favor very quickly. But I have a good feeling that this is just the beginning of a lot of opportunities in China. So don't feel like you missed it.

Not only do I think we're just getting started, but we even created a brand new FANGhai Composite Index to help us track this new trend.

This new Index includes BABA, PDD, BIDU, BYDDF, XIACY, JD & TCEHY. Here's what that chart looks like here:

Think about this Index as representing the most important companies in China that trade on United States exchanges. The way I see it, if you get these right, you're going to get the direction of that market right.

Here's a quick rundown of China's "Magnificent 7":

Alibaba Group (BABA): Leading global e-commerce and cloud services giant, often compared to Amazon. This is truly the "Amazon of China," with a heavy footprint in e-commerce and digital services.

Pinduoduo (PDD): E-commerce platform rapidly growing through its group-buying model. Think of this one as the discount online marketplace of China, focusing on social commerce and price-conscious consumers.

Baidu (BIDU): China's top search engine and a leader in AI development, particularly autonomous driving and voice recognition. Think of this one as the "Google of China," with a strong emphasis on AI and search.

BYD Co. Ltd. (BYDDF): A major manufacturer of electric vehicles (EVs) and batteries. This is the "Tesla of China." It even trades more like Tesla than it does Chinese Stocks.

Xiaomi Corp (XIACY): A leading Chinese electronics manufacturer known for its smartphones, smart home devices, and plans for electric vehicles (EVs). This one is emerging as the "Apple of China," or at least one of them. Their phones & electronics have a huge presence in Asia & Latin America.

JD.com (JD): Another e-commerce retailer in China. JD is actually the largest by sales and has become a leader in logistics with a robust ecosystem of physical and digital stores. Think of this one as a Chinese hybrid of Walmart and Amazon. JD's subsidiary, JD Health, is the largest online healthcare platform in China.

Tencent (TCEHY): A global leader in social media (WeChat), gaming (Riot Games), and digital payments and services. This is basically the "Facebook of China."

It's an exciting time to be an investor in China.

It's really lonely. There aren't a lot of us.

But it's been great so far. And I think we're just getting going.

Get access to the next Breakout Multiplier trades here.

We offer a RISK FREE trial, where if you decide that this membership is not for you, just email us and Mary will send you a full refund, no questions asked.

I'll see you at this week's LIVE Video Portfolio Review. It's exclusive for Members of Breakout Multiplier.

Cheers,

JC Parets, CMT | Founder, All Star Charts

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