KWEB is a safer way to trade China, if you dare – December 27, 2022
KWEB TAL NIO
This is Scott with your Chart of the Day. I want to share a chart with you, it’s KWEB ( NYSEARCA: KWEB ), which is the Chinese Internet ETF.
I go back and forth with China stocks. I typically don’t trade single China stocks because you can get something like TAL Education ( NYSE: TAL ) that goes from $88.00, or actually even higher, over $90.00 to $1.00, a 98 percent pullback. If you were to show this chart to anyone they would probably look at it and ask, Is that a crypto? I’ve seen crypto do that, but China stocks can also do that.
Just look at Nio ( NYSE: NIO ) for example. Nio ( NYSE: NIO ) has been floundering here after a massive run. They can give you these massive runs but they also tend to pull back hard. So I tend to be kind of iffy on China stocks but I do see the pattern here on KWEB ( NYSEARCA: KWEB ).
The technical analyst in me says, look at the chart, don’t think about the noise. And so I see a chart, right here, where price is above all the major moving averages and in a short base. We can draw a downward-sloping trendline from the high here and see it’s trying to break out of this clear flag pattern.
Not only that, when it does go up it goes up on heavier than average volume. And when it does pull back it pulls back on less than average volume, so the technical pattern is there if you can kind of get away from China and the fear of trading a China stock.
This has less single-stock risk, but there is, obviously, still tons of risk when you trade anything that is overseas, especially something China-based, I just want to make that clear. Don’t feel like you have to do this, a lot of people don’t. I may or may not, I don’t know yet. But I do see the pattern here, and I see that it is trying to break out and push above a clear pivot.
So I want to bring this chart to your attention. It is definitely one that I am going to keep on a watch list over the next few weeks.
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