The China Setup to Watch

Happy Thanksgiving! A quick pause to say thanks—for the markets, the lessons, and the endless opportunities ahead. 

Let’s enjoy the holiday, recharge, and get back to the grind. 

Here’s today’s note!

Chinese equities are brewing something big.

With the most heated areas not breaking down, and instead, catching a bid, it's tough to imagine China will sit on the sidelines.

Just a month ago, Chinese stocks logged one of their best short-term performances ever.

Since then, they've been in a corrective wave, digesting those gains in the context of a multi-year base.

The China Internet ETF $KWEB is a great representation of what’s happening in China.

The key level for me is $31.50. I’m looking to jump this entry in anticipation of a base breakout.

Not only is this the lower bounds of a tight pattern, but it also lines up with the VWAP from the all-time highs—which has acted as resistance several times in recent years.

In the lower pane, you can see our volatility squeeze indicator shaping up, suggesting an expansion phase could kick off any day now.

If $KWEB reclaims $31.50, it’s game on for China.

We just bought some calls in FXI, TAL, and JD via our Breakout Multiplier system.

I have a feeling we’ll be buying a lot more Chinese names in the future.

If you want to get these trade details, click here and join our Breakout Multiplier team.

Cheers,

Alfonso