FXI

FXI , iShares China large caps.

Hamilton

FXI july 27 2015

This is the iShares China large cap. ETF. We have shown it before some 4 years ago and were impatient then. Now we show the chart for the sheer beauty of it. It adheres to a lot of the “tenets” of EW even if it is not absolutely clear whether this is a double zig-zag or a large flat. Here are some of the astonishingly precise features.

a. The initial leg down is composed of either 5 waves or three waves in an a-b-c. The a and c legs are equal within a dollar or two.

b. The total retracement – in wave B – is precisely 61.8 % of the drop in wave A. Trust me I did the math with a calculator. Also it reaches, within a dollar or two, the 4th wave of previous degree or, alternatively the top of the b wave of A down. The total travel in the a and c parts is about equal (in purple).

c. The b leg in the B wave is clearly a triangle that is perfectly confined within two lines and the individual 5 legs  relate, alternatively , to each other by a factor of .618.

d. The mouth of the triangle perfectly predicts the size of the thrust from the triangle after wave e has found it’s bottom.

e. The top of the B wave or the thrust is above the apex of the triangle, at least roughly.

f. If we draw the coming C wave proportionate to the A wave – not equal as there is insufficient room – we get exactly at the starting point of this ETF which is where we should be heading.

The only thing that one could not have predicted, and we certainly did not, is that this whole process, that is the retracement, should take the better part of six and a half years. Normally it should have been two or three at the most. For this delay, that has no productive value at all, we can thank the Central Bankers. Amusingly one quasi member of this august club, the IMF, now has the gall to berate the Chinese for what they have learned from the Fed. Manipulation of free markets is now frowned upon, not in the US but of all places in China which no sane person considers “free” in the first place.

For the record, EW does not have any “tenets”. It is not a theory. It is simple the outcome of deductive and pragmatic observations. There is nothing to quarrel about.

IFN, India and CHN, China update

Hamilton

First the old blog from Febr. 10, 2011, 17 months ago;

india and China feb 2011

And here today’s charts;

ifn jul 2012chn jul 2012

The little red arrows show where and when these ETFs were on Febr. 2011. Both were at about $30 at the time, so now , a year + later they are down to roughly $20 which is about 30%. Both are probable in a wave 4 of a five wave sequence for wave C. We do not now how low they will ultimately go, but they should , at least , go below the ‘09 lows. IFN comes from $70 and CHN from $55 so both are down by more than 50%. Using the FXI as an alternative ETF (iShare) for China we get pretty well the same picture;Same with Shanghai DJSH

fxi jul 2012shanghai jul 2012

The FXI is down about 60% from the highs. It should, as a minimum, trade below $28 after which it will probable make new post peak lows. Shanghai has done very little over the past year but the EW count is analogous to the others. If China and India are making “soft” landings, investors in these indices probably do not agree.

FXI and FXP, XinhuaChina 25 ETF, and the Ultrashort, both iShares.

Hamilton

Earlier I suggested the Shanghai index (DJSH index ) might be ready for a substantial drop. So far it did drop but not that much. Here is the FXI which is 46% banks which may presently be more to the point as , after all it is the banks that are lending as if there is no tomorrow, even if they are doing it on command. The FXP is the equivalent short, ultra short (3x) which may be a good hedge for any commodity position. here are the charts.

 FXI Feb 2010fxp feb 2010

The FXP looks a little like the heart beat of a patient that did not make it, but then it comes from $200 not that long ago , so evidently there is some potential here.