The worst stocks on the planet. Yes those. They're even buying those.
That's what happens in bull markets.
The CSI 300 is up over 4% overnight. This is the Chinese equivalent to the S&P500, which is now bouncing off support from Q1 and potentially putting in a historic double bottom:
Think about what this could mean to global markets, if even the worst stocks can't go down.
I mean, just look at the returns in China compared to the United States over the past 4 years, taking it back to before the prior cycle's peak.
Using this timeframe, you can really see the lack of recovery in China.
And I'm not just cherry picking the CSI 300 here.
It's just that this index is a good representation of the Chinese Market.
But if you want to compare that to the more popular China ETFs, you'll see the same thing, or worse.
While the CSI300 and China Large-cap 25 Index $FXI are only down 26% for this period, the China Technology ETF $CQQQ is down double that. So is Chinese Internet ETF $KWEB.
I look at a lot of charts folks.
The Chinese ones are the worst ones.
And there aren't any sellers left.
That's the point here.
They're even buying the worst ones, which is just further evidence of risk appetite for equities, not risk aversion.
So first, from a more global macro perspective, this is a tailwind for market bulls and shareholders of stocks. The fact that they can't even sell China, is NOT a good case for the bears.
Second of all, how do we profit from this?
In other words, first weigh the evidence, determine the environment that we're in, AND THEN find the best way to express that thesis in the market.
This is the top/down approach that we always talk about.
Now break it down to the individual stocks that make up these indexes and look at names like Tencent $TCEHY or Alibaba $BABA or $JD.
There are a lot of ways to execute.
And that's where the trade ideas come in.
If you're interested in learning more about my process, I will be hosting FREE live event afternoon where I will be walking through all of the most important components of the Top/Down approach to Financial Markets.
