It must be over a month ago now that noticed the trade in commodities was not looking very good and speculated that China is being hit with a slowdown as one of the world's largest consumers of commodities. A few weeks later we got confirmation via SM services and manufacturing, both of which printed sub-50 or in decline. There has been additional evidence since and I spoke of this as late as last night.
Today, more confirmation:
- CHINA'S `NOT TOO OPTIMISTIC' ABOUT EXPORTS IN 2012, CHEN SAYS
- CHINA'S TRADE GROWTH MARGIN DECLINED IN DECEMBER, CHEN SAYS
- CHINA EXPORTS 2 PERCENTAGE POINTS LOWER IN EACH MONTH OF 4Q
- CHINA 2011 IMPORT GROWTH RATE 5 PCT POINTS HIGHER THAN EXPORTS
- CHINESE COMMERCE MINISTER CHEN DEMING SPEAKS AT GENEVA BRIEFING
FXP has been the trade of choice for broad China coverage, but commodities also and VALE was a specific play on both.
FXP, the inverse leveraged bear ETF on China looks like in the near term it will give us a pullback and a better entry, the longer term looks solid, so make sure FXP is on your radar.
On a daily chart, our crossover screen is very close to a long signal and I would expect a pullback may end around the red box.
Intraday we have a small ascending wedge, there may be an upside head fake move, but ultimately this should break down, volume is correct for the bearish intraday wedge, that's our pullback.
The 2 min chart confirms short term distribution in to the wedge.
The 5 min chart remains strong so again, I expect a pullback only.
The 30 min chart also remains strong and it looks like a recent "W" base has been formed. Watch for volume to expand on a rally out of the base.
The 60 min chart shows the "W" base better and a strong leading positive divergence, so short term pullback, longer term strength.
Most impressive is this multi-day 3C chart showing a rounding bottom that appears to have huge accumulation, so just have a little patience, let the trade come to you. China is obviously heading for a hard landing.
No comments:
Post a Comment