Chart Advisor: Chinese Equities Roll With the Punches

Articles From: Investopedia
Website: Investopedia

By J.C. Parets & All Star Charts

Tuesday, 20th June, 2023

1/ Chinese Equities Roll With the Punches

2/ IPO Emerges Higher

3/ Crypto Stocks Strike Back

4/ Commodity Currencies Confirm

Investopedia is partnering with All Star Charts on this newsletter, which both sells its research to investors, and may trade or hold positions in securities mentioned herein. The contents of this newsletter are for informational and educational purposes only, however, and do not constitute investing advice.

1/ Chinese Equities Roll With the Punches

Technology, consumer discretionary, and other risk-on growth stocks have been ripping higher in recent weeks. But one market area the often enjoys a bid alongside these names has been left out of the loop: China.

Check out the China ETF (GXC) posting its largest one-day downside rate of change since last October:

The bulls have stepped aside as price undercuts a key shelf of former lows. And considering that GXC is turning away from a downward sloping 200-day moving average, this represents a bearish signal for Chinese equities.

There’s plenty of strength to be found overseas right now, just not in China.

2/ IPO Emerges Higher

With technology and growth areas leading this year, it was time for the laggards to wake up and catch higher.

The Renaissance IPO ETF (IPO) is finally piercing to the upside through its early-year highs of around $31 as buyers take control.

A lack of an oversold reading on the 14-period relative strength index (RSI) and a flat-to-upward-sloping 200-day moving average are present on the chart, which means that a transition from bearish to bullish could be underway.

If this breakout above $31 sticks, IPO could complete this base and kick off a new leg to the upside.

3/ Crypto Stocks Strike Back

Although Bitcoin (BTC/USD) and friends were lagging for a couple of weeks, crypto stocks look ready to wake up from their nap.

We’ve created an equal-weighted crypto miners index that includes Marathon Digital Holdings (MARA), Riot Platforms (RIOT), and Hut 8 Mining Corp (HUT).

These stocks found their floor after a nasty drawdown last year and have been carving out a rounding bottom formation since.

The index is pressing against the upper bounds of the range and threatens to break out.

If and when it does, these stocks will likely be an excellent vehicle to express a bullish thesis in cryptocurrencies.

4/ Commodity Currencies Confirm

Besides the U.S. Dollar Index (DXY) trading below 101, we have monitored two key data points for confirmation of continued dollar weakness.

The euro trading above 1.08 is the first and foremost, as it constitutes over 57% of DXY. (Today, it’s challenging a 1.10 handle.)

The second piece of confirming information involves commodity currencies. The Canadian dollar, New Zealand dollar, and Australian dollar needed to reclaim their July pivot lows.

They did just that last week:

The Canadian dollar completed a multi-month basing formation, joining the aussie and kiwi above its respective summer 2022 pivot lows.

If these commodity currencies continue to trend higher, dollar weakness could broaden as the index trends below that crucial 101 level.

Originally posted 20th June 2023

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