They Couldn't Break the Chiner

We have what looks to be some late-stage bifurcation rotation again today, with the downtrodden China stocks getting a secondary boost off recent lows after their early-October pop. On the first chart, below, of the weekly timeframe for the FXI China country ETF, we can see the bull flag potential uncoiling higher today, with names like BABA JD leading.

Meanwhile, the mighty parabolic tech names are finally taking a breather for what seems like the first time in forever. In fact, NVDA is off by about 2% on China antitrust claims. 

In addition, on the second long-term chart, below, we can see Netflix has been on a tear for essentially ten consecutive quarters, with the current, enormous quarterly candle popping outside the upper quarterly Bollinger Band, indicative of uniquely overbought conditions. And if you pull up a daily chart for NFLX on your own, you will see the stock has not even tested its 20-day moving average (a fairly short-term reference point) since mid-October, a rather long time indeed to go without so much as testing it. 

With CPI inflation data this week, then the FOMC and Bank of Japan meetings next week, it may be a mistake to assume that 2024 is over and done for markets.

Due to how steep and crowded the U.S. tech trades are, a routine pullback may not be in the cards, meaning there is risk of another August-type event if profit-taking sets in even modestly. Also related: PLTR staged an abrupt reversal this morning. If there is follow-through lower this week I expect it to not be garden-variety at all.