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Chinese Stocks Could Be the New Driving Force

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Chinese Stocks Could Be the New Driving Force

Chinese stocks could be leading the charge higher, as US shares begin to rebound. Chinese shares have been in the doldrums, but the recent technical picture shows that the MSCI China Index Fund is beginning to generate positive momentum.

US economic news continues to show mixed results which was reflected in Wednesday’s mixed Durable Goods Order’s report. Headline Durable goods orders increased by 2.2% in February, but the majority of the climb was in the aircraft sector. Economists polled had expected durable-goods orders to be unchanged. Excluding transportation, orders rose a smaller 0.2% in February, according to the Commerce Department. Orders for core capital goods fell 1.3% last month and the increase in January was revised lower. Shipments of core capital goods, a category used to calculate quarterly economic growth advanced 0.5%.

The MCHI ETF is rebounding from its recent lows and traders should be conscious of the buy signal created by the MACD (moving average convergence divergence) index. This occurs when the spread (the 12-day moving average minus the 26-day moving average) crosses above the 9-day moving average of the spread. The index moved from negative to positive territory confirming the buy signal. The ETF is inching toward resistance near the 50-day moving average at 44.35, while support is seen near the recent lows at 42.0. The relative strength index (RSI) is moving higher with price action, reflecting accelerating momentum and potentially higher prices for the ETF.

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