China tech

I know, China is about to crash right? Here is some news for you: Shanghai Comp already crashed -49% from 2015 high to January 2016 low, and since then quietly rallied 25%. 

Here's an idea - if USA tech gets laggy then maybe China tech will takeover as a sector-like leader. This is pure theory at this point, since some key China tech names have weaker pivot status than QQQ. Because we should compare apples to apples, let's stick to ETFs instead of stocks. The highest volume is KWEB and it has the big names: Alibaba, Tencent, Baidu, etc. 

Repeat, not a trade rec, this is larger view idea for a theme we may see in 2017. At this point it is somewhat like this post on rates, bonds and financials in August, which was an idea about sharply rising rates. Although I had recommended TLT as a speculative short right at the highs, the real official TLT short signal along with clear XLF out-performance came more than 6 weeks later at the beginning of Q4 in early October. 

Sum
No hurry to enter here with KWEB below Q4P and DecP (medium term weakness) while QQQ still holds above Q4P. Thus far China tech has dropped sharply off early October highs and lower since the election. If YP breaks then I will put this idea on a shelf and not take it off until recovery, and even then we'll soon have 2017 pivots in play. But if QQQ breaks Q4P and KWEB holds its YP then pivot status is roughly equivalent and I'll keep an eye on it. 

KWEB W
Not so impressive below falling 20MA, rising 20MA; still above flatish 50MA and 100MA however. This chart is basically sideways and range bound since 2014. 

Comparing to FXI from 2014 in red, mostly the tech companies have outperformed with brief period during the massive China rally in 2015 1st half. 

Moving to a daily chart from 2016 2H, tech was outperforming but now not really. 

KWEB W
Standard long term pivot chart here with high on 2HR2 and back to test the YP. If long I would not have confidence that it holds since already tested. 

KWEB D
This is more of a toss up with YP test on RSI divergence. 

Lastly I really have no idea how much currency is impacting the range on KWEB. Here's CNYUSD from 2014, -12%. This means theme could be right and KWEB might not be the best vehicle.