Chart In Focus – Chinese Internet Stocks

Today we want to highlight an area of the market that market participants are watching to gauge the overall stock market’s next move. 👀

Below is a chart of the popular Chinese Internet ETF $KWEB, which was down 6.79% today as it fell to nearly 1-month lows. 🔻

For the non-technical analysts out there, essentially, you’re looking at the ETF failing to make new highs a couple of weeks back as buying momentum waned. Now, it’s heading back to the downside in a sharp fashion.

And the reason why this ETF is in focus is because of its recent propensity to lead moves in the U.S. stock market in general. 🦮

Its price topped in early 2021 before Technology stocks and other speculative assets in the U.S. started moving lower. And in March of this year, it put in a price low and began to move higher, even as U.S. technology stocks (and stocks in general) were continuing to the downside.

Additionally, it’s one of the riskier areas of the market due to its concentration of high-growth technology names, its exposure to Chinese regulators, and its high beta as a trading vehicle. 😨

So from a sentiment perspective, it offers a view of how market participants are positioning themselves — offensively or defensively. 

And right now, several market participants/analysts are viewing the recent move down as a potential leading indicator of more pain to come for stocks in general. 😬

We’ll be watching to see if this breakdown accelerates into a further decline. Or if this niche market barometer can find its footing in the days ahead.

Hop on the streams and let us know your thoughts as well! 💭