Sean Hyman
Contributing Writer
instructor@mywealth.com
Being an avid chart watcher, I always like to see what indices seem to show improvement the quickest. It’s always good to be attune to the first “signs of life” and where they appear.
So I was looking around recently as I routinely do and I noticed that China’s stocks are perking back up again. That’s a good thing. Because if that large economy perks up, then it will help the entire global economy.
In looking at the Shanghai Composite Index below, I see the first signs of life “higher lows and higher highs” on the charts. This tells me that for the first time in a long time, new buyers are coming back into Chinese stocks (as noted by the red downtrend line being broken).
China may lead the way out of the global recession.
There are several technical improvements that we haven’t seen in a while such as: the higher MACD below the chart and the stock prices coming back up above the 50 simple moving average.
These are all signs of life for Chinese stocks. For those that don’t understand technical analysis, it just means that there are signs of renewed strength and buying that haven’t been seen since it came crashing down.
You can look at Chinese stocks like Baidu (BIDU) and the Chinese ETF (FXI) that tracks 25 of their top stocks and you will see a recovery in these too.
If China continues to perk up, the improvement in their economy will help to bring “renewed business” to other countries that they do business with (like the U.S.). This will also improve the overall sentiment out there which is a very important thing to have in order to come out of a recession and a bear market in stocks.
So be sure to check these stocks out, because they could be some of the first ones that lead us out of the global recession.
