FXI’s overbought condition in the middle of last week has quickly reversed. It was part of the brutal global selloff in yesterday’s trading session.
Now is a good time to take profits after only holding for less than a week.
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While many global economies are struggling with growth due to the pandemic and internal factors, the UK has multiple headwinds that point clearly to a weaker GBP in the weeks ahead. Using the C.O.B.R.A. system, Jim and Dan recommend a short position in an exchange-traded trust vehicle that mirrors the price of British pounds sterling and will make significant gains in the coming weeks.
Since the war in Ukraine, EWZ has been in an upward trend as investors look to Brazil to supply oil, metals and agricultural commodities that Russia will not. EWZ is now overbought as the chart’s 50-day CCI indicates. Let’s sell at a nice gain and watch EWZ for another trade in the future.
There is potential stress in China’s all-important property markets which may take months to resolve. For now, FXI is oversold and could rally so now is a good time to take profits. Also, negative surprises in Chinese economic data and concerns about tapering of Fed QE have depressed commodity prices and weighed on FXA. FXA is oversold as well, so now is a good time to take profits.
In a little over two weeks, we have had a nice gain on our EWY position. Samsung (a major component of this ETF) will report earnings later this week. It might spark a bounce in the stock. Let’s sell this position now and watch EWY for another high-potential trade setup in the future.
FXE was a positive reversion trade on July 1. At the time, its 50-day CCI reading was low enough that our system flagged it as oversold. Nearly a month later, the oversold condition has been resolved by a sideways movement, not a strong rally. Despite burning a month of time, we can exit the position now at only a small loss.
The Chinese Communist Party (CCP) has declared war on its own companies, especially large tech companies. These companies and others included in the iShares China Large-Cap ETF will be subject to continual harassment and negative shocks. Using the C.O.B.R.A. system, Jim and Dan recommend a short position in FXI as a combination of tech wars and currency wars is a recipe for a drawdown in the FXI price.
