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The markets are telling a story, and China is the big headline. After what felt like an eternity of sluggish performance, we’re finally starting to see some serious movement from Chinese stocks. This isn’t just a small bounce—it’s a breakout, and it could be the start of something big.
More on China in a minute — let’s quickly discuss U.S. markets first…
When markets go parabolic — meaning they’re climbing relentlessly without a pullback — it can be a scary thought for traders. While it feels great when everything’s going up, parabolic moves often signal that things are getting overheated. History has shown us that when markets shoot straight up without taking a breather, they’re more likely to come crashing down just as hard.
That’s why I’m watching closely right now…
The U.S. markets have been grinding higher, but if we don’t see some healthy pullbacks or pauses, this rally could turn into a bubble waiting to burst. It’s crucial to stay tactical and not get too caught up in the euphoria — because when the music stops, the drop can be brutal…
Stairs up, elevator down. Now for China…
Why I’m Bullish on Chinese Stocks
In today’s market, with the U.S. looking a little overextended, China seems to be stepping in with some serious growth potential. And for traders like me, it’s an opportunity that’s hard to ignore.
So why China, and why now?
For the past year or so, I’ve been steadily adding exposure to China despite the doubts. I’ve talked about this before — positions in Alibaba (BABA), Baidu (BIDU), the iShares China Large-Cap ETF (FXI), and the KraneShares CSI China Internet ETF (KWEB).
At times, it felt like I was speaking into the void. But here we are, and the numbers are finally starting to back it up. Alibaba shot up over 10% on Thursday, Baidu’s soaring, and other China-related stocks are jumping again on Friday.
And this isn’t just a blip on the radar.
China’s central bank has been injecting liquidity into their economy, cutting rates and adding fuel to the fire. Their recent moves suggest they’re committed to spurring economic growth in a big way. With the U.S. markets showing signs of exhaustion and many global economies struggling, China’s actions might just be the catalyst the world needs to keep pushing forward.
Technical Breakouts & Massive Upside
Take a look at Alibaba… It’s not just up — it’s breaking out.
I’m seeing a potential wave structure developing, and if we’re in the early stages of a wave three move, we could be in for a significant rally. With levels around $130 to $160 on my radar for potential targets, this trend has legs.
Symmetry is crucial here, and if these moves play out, we could be looking at massive gains.
This isn’t just an Alibaba story, either…
Look across the board at Chinese stocks like JD.com (JD) and Baidu, and you’ll see similar setups. There’s been a lot of pent-up demand, and now that demand is starting to hit the market in full force. Traders and investors are rotating into these names, and the technicals are lining up perfectly for continued growth.
Meanwhile, the U.S. market continues to grind higher but it’s starting to feel stretched. We’re seeing all-time highs, but as I said earlier, without a significant pullback or consolidation, this market could be due for some volatility.
But even if the U.S. market slows down, China’s momentum doesn’t look like it’s about to let up. The relative strength and order flow into Chinese stocks suggest this could be the start of a new rotation — a move out of the U.S. and into China.
Bottom Line
This could be the perfect storm: The U.S. markets slowing down, China ramping up liquidity, and technical setups aligning for a massive move higher.
I’m holding my positions in Alibaba and Baidu, and looking for opportunities to add to these positions on pullbacks. If China continues to pump money into the system and global growth stabilizes, we could be looking at significant upside in these stocks.
Stay patient, stay tactical, and don’t sleep on what’s happening in China right now.
I’ll see you in the markets.
Chris Pulver
Chris Pulver Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
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