CHINA ETF PULLING BACK AFTER BREAK OF DOWNTREND – AN OPPORTUNITY TO BUY?

The iShares China ETF is pulling back after a nice run to the upside in recent months. Will the Chinese international leadership continue or is it too late to profit on the upside there? What's happening that's driving the action in FXI? Activity in China caught some headlines Tuesday after the Chinese government said they would be taking stimulative action to boost their economy. Was that priced into FXI shares or is there still more to come? The recent rally would indicate that much of that may have been priced into the shares of FXI. However, the chart indicates that there may still be upside left in FXI before it's all said and done. What can the charts tell us specifically? Technicians note that the chart of FXI indicates that once near-term support is tested at $38 or so, another nice move to the upside may commence – with upside targets of $45 - $47.35. However, if a break and close below $38 occurs, a continued move down to the next key support at $33.03 would be likely. Overall… If the Chinese government puts their foot on the economic gas pedal, the odds are they will eventually get the growth they want – that type of control is one of the conspicuous benefits to having a command economy. However, as we know here in the US, what happens in the economy is not necessarily a good proxy for what is happening in the stock market. Right now, whatever the fundamental reasons, the iShares China Large Cap ETF appears like it will decline a bit further in the short-term before making another big push to the upside.