Will China Tech End The China Bear?
Chinese stocks entered a bear market in June of this year when the Hang Seng Index fell 20%. The selling continued this fall reaching a low on October 29th bringing the total correction to 30%.
Since then, a few of the more widely traded and well known Chinese technology stocks have begun to show potentially bullish technical signals.
The most notable being Alibaba (BABA). With a market capitalization of $400 Billion this tech heavy weight makes up a solid chunk of most China related ETFs.
The price of Alibaba's stock just recently broke through the upper boundary of the six month descending channel. At the same time price managed to hold above the important 61.8% Fibonacci Retracement level and more importantly failed to make a new low. It could also be argued that an inverse head and shoulders pattern is present.
Tencent (TCEHY), another Chinese tech stock with a market cap of $360 Billion looks very similar but price hasn't broken above the persistent descending channel. Yet.
With these two Chinese technology giants showing potential signs of bottoming, it could be a good indication the bear market in Chinese stocks could be nearing an end.
I will be watching the price action in both of these names closely heading into the end of the year.
Stocks finished lower on the week but buyers stepped up Thursday and Friday limiting the damage and keeping prices firmly above their October lows.
All the major sectors finished in the red along with AAPL and FB which continue to experience selling pressure.
As the market continues to test the bull's and bear's resolve, there are still stocks trading at or near all time highs. Many of the same stocks experiencing relative strength over the last few weeks continue to trend higher.
Below are five of the stronger trending stocks on my CM50 (Canadian MegaTrends) & UM50 (US MegaTrends) lists.
Remember that chasing stocks higher is not recommended and even the strongest trending stocks can experience significant drawdowns.