China has been experiencing some nice strength over the last few weeks. I’ve been watching the relative performance of $FXI in relation to $SPY to see if the outperformance of Chinese equities can continue to lead U.S. large caps. This relationship is hitting some resistance, and this is the topic of my TraderPlanet article for this week.
Here’s a piece:
On November 13th I tweeted a chart of the relative performance of FXI and the S&P 500 (SPY). There appeared to be a positive divergence in momentum being created which was bullish for the Chinese ETF. What made this divergence in the Relative Strength Index interested was it was happening at the same time as the relationship between FXI and SPY broke its short-term trend line. We can now see that it was a false break as China’s outperformance pushed the ratio back above the trend line and headed higher through the rest of the month.
Read the rest: Chinese Strength Hits a Wall (TraderPlanet)
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