Thursday, November 1, 2012

Chartology: A Bullish Sign for the Shanghai Composite Index (YINN, YANG)

YINN is the Direxion China Bull triple levered ETF.
It's more dangerous, in the wrong hands, than weaponized anthrax.
I feel strangely attracted to it.
The writer of the below piece prefers the un-leveraged iShares FTSE China 25 Index Fund, FXI.
From Advisor Perspectives:
The 18-month decline in the Shanghai index brought it down to six-year support line (1) recently (see the chart below). While at this line the index might be forming a "Bullish inverse Head & Shoulders" pattern at (2).

The global growth picture would benefit "IF" this pattern analysis is correct.

The world's markets NEED this index to push higher from here. A break of support line (1) would reflect the bullish pattern failed and send a signal of slower global growth is at hand....MORE

After dipping below the 2000 level on Sept. 26 and 27 the index has bounced back a bit more than 5% to 2,104.43. Yesterday's 35 point, 1.72% pop was good for 4.70% on the YINN.
Because of that tracking error (YINN should have been up 5.16%) you might be better off just shorting it and the Direxion triple levered bear ETF, YANG, and collecting the time decay (theta) of the options inside the little beasties.

The Shanghai Composite reached a record high of 6,092.06 on Oct. 16, 2007. 


August 20 
Shanghai Index Within 7 Points of Jan. 2009 Prices
August 22 
Chartology: The Shanghai Index
Sept. 5 
Shanghai Composite Hits Another Low
Sept. 26 
"Shanghai Composite Update"
As soon as I wrote:

 "We've gotten about 15% (to the downside) out of the Shanghai index and it may be time to re-think the master plan for world domination (ours, not China's)
The index is holding 1% above Monday's 44-month lows."
in yesterday's "China's Conference Board Leading Index Spikes, at Odds With Shanghai Stock Index", I thought "What's a word for arrogant overconfidence?". Then I hit the "send" button.
Sure enough the index promptly traded down to 1,999.48 before closing at 2,004.17, multi-year lows on a closing and an intraday basis....