🐉 China's back (but does it last?)

The Chinese government has recently announced fiscal stimulus to support the Chinese economy.

And Chinese stocks have appropriately responded positively to the news.

Here’s a look at the Chinese internet ETF $KWEB:

After spending 3-years underneath overhead supply at the 33.50 area (and countless head fakes), KWEB looks ready to breakout and begin a potential stage-2 uptrend.

We went through the entire Chinese sector last night, highlighting the best potential trade setups going into 2025.

If you’d like to watch that for free, click the video below:

The popular trade to take is Alibaba BABA, which to me looks tougher than the others:

After spending much of the last 3-years underneath the 124.50 level, BABA is up nearly 20% this week.

The problem is that there is still significant overhead supply to fight through, and options contracts are historically very, very expensive given the increase in implied volatility.

There are other charts that may end up being the easier trade, such as Full Truck Alliance YMM:

Much like BABA, YMM has built-out a base over the last few years and is pressing into its overhead supply.

What makes YMM more attractive as a trade is that there is a significant lack of overhead supply above the pivot point, which could give us edge as momentum tends to carry farther without eager sellers.

We like YMM above 9.50 with a stop out on a close below 8.15 and take profits at 13.00 and 19.50.

From an options standpoint, January 17th 2025 10 Calls for no more than 1.00.

We also like KE Holdings BEKE:

Once again, unlike BABA KE Holdings has a clear risk-on level at 20.00 after building out a 2-year base.

The 20.00 area provides a pivot point that we can risk off of, so we’re looking at owning BEKE above 20.00 with a stop out on a close below 18.00 and take profits at 27.50 and 40.00

From an options standpoint, we like the January 17th 2025 24.85 Calls for no more than 1.00.

Regardless of what you end up buying, if this breakout in Chinese stocks is to be trusted, it’s safer to assume that this results in a secular bull market breakout that could last quarters or years.

Just remember..

The Chinese government has promised fiscal stimulus in the past and failed to deliver.

If you’re willing to take the risk here, there could be some incredible reward.

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What’s your favorite Chinese trade here? Let me know.

Cheers,

Hamilton

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