The Pain Could Be Ending in This Hated Market

Chinese tech companies have had it rough recently... In the previous decade, they were the envy of the world. They had been on the way to dominating the world's largest consumer market. And they could basically grow unchecked. [Chaikin PowerFeed]( The Pain Could Be Ending in This Hated Market By Vic Lederman, editorial director, Chaikin Analytics Chinese tech companies have had it rough recently... In the previous decade, they were the envy of the world. They had been on the way to dominating the world's largest consumer market. And they could basically grow unchecked. But things changed in late 2020... That was when China's leader Xi Jinping started to put the entire sector under intense regulatory scrutiny. The Chinese government was worried that these companies were becoming too big and powerful. Throughout 2021 and 2022, it cracked down hard. For example, online-shopping titan Alibaba (BABA) could no longer stop merchants from selling products on other e-commerce platforms. Innovative online-tutoring businesses suddenly couldn't charge students for their tuition fees. These companies cater to a huge market of millions of aspiring high school graduates each year. Online-payment firms, like Tencent's WeChat Pay, were forced to allow their hundreds of millions of users to access competitors' services. Even video-game developers were prevented from publishing their titles for eight months. They also had to limit game time for minors. The Chinese government handed out massive fines for antitrust violations. Growth collapsed. It was mayhem. And it was a huge hit on the way Chinese tech companies made money. As such, it was no surprise that investors soon didn't want anything to do with these stocks. But as I'll explain today, the pain in this corner of the market could be winding down... Recommended Links: ["I Haven't Seen These Warning Signals Since 2007 – Watch Out"]( Porter Stansberry correctly predicted the 1998 emerging market crisis, the 2008 financial crash, the loss of America's AAA credit rating, and the recent banking collapses. Now, Porter is stepping forward with an urgent financial warning that cuts directly against the establishment's narrative. If you have any money invested in the stock market, #PROMOURL[you could be blindsided unless you take this step](. [This Power-Mad Politician Has a Dangerous "Master Plan"]( He's not Joe Biden. He's not Donald Trump. He's not anybody else from D.C. that you've heard much about lately either. But that hasn't stopped this power-mad politician from unleashing a "master plan" that could plunge over 1,900 companies into bankruptcy... even as the same plan helps mint new American millionaires. How so? [Get the full story at this link](. We can see the carnage in recent years by looking at the KraneShares CSI China Internet Fund (KWEB). It's a U.S.-listed exchange-traded fund ("ETF") that invests in the largest Chinese tech stocks. Since its peak in mid-February 2021, KWEB has fallen about 73%. Meanwhile, the Invesco QQQ Trust (QQQ) – which tracks the tech-heavy Nasdaq 100 Index – is up roughly 28% over the same time frame. Naturally, many investors are still worried that the same losing trend will continue for Chinese tech stocks. By the end of 2023, the Institute of International Finance was projecting an outflow of $65 billion from Chinese stocks and bonds in 2024. It would be another bleak year. The truth is, when it comes to Chinese tech stocks, it's hard to imagine things getting much worse than they already have. Even by mid-2023, the crackdown showed signs of easing. Meanwhile, China's economy continues to chug along. It grew 5.3% in the first quarter alone – beating expectations. Even before this, companies like Alibaba and JD.com – two of China's largest tech firms – were posting strong earnings growth when they reported year-end results. That's why by now in 2024, KWEB isn't vastly underperforming QQQ. Take a look... [Chaikin PowerFeed] That's despite intense pessimism in just about everything we've seen in the media about China these days. When things manage to do this well in the face of extreme negativism, it's a sign that the "smart money" is starting to creep back in. As regular readers know, we can track the smart money in the Power Gauge through our Chaikin Money Flow indicator. As you can see in the chart below, KWEB's Chaikin Money Flow has been ticking up recently from being deep in the negative. And it just hit about breakeven. Take a look... [Chaikin PowerFeed] This doesn't mean that it's time to rush into Chinese tech stocks... As you can also see in the chart above, we've seen a few of these upticks in KWEB's Chaikin Money Flow already this year. And the Power Gauge rating is still "bearish" – as it has been for most of 2024. Put simply, our system is still saying to be cautious right now. But the recent performance of Chinese tech stocks compared with the Nasdaq 100 this year is telling us investors are starting to pay attention to this corner of the market. I'll wait for a stronger overall signal from the Power Gauge. But I'll have my eye on what happens next with Chinese tech stocks. Good investing, Vic Lederman Market View Major Indexes and Notable Sectors # Hld: Bullish Neutral Bearish Dow 30 -0.92% 4 23 3 S&P 500 -0.39% 124 316 58 Nasdaq -0.48% 18 68 14 Small Caps -0.6% 383 1085 437 Bonds -0.7% — According to the Chaikin Power Bar, Large Cap stocks are more Bullish than Small Cap stocks. Major indexes are mixed. * * * * Sector Tracker Sector movement over the last 5 days Utilities +3.85% Energy +2.99% Staples +2.75% Financial +2.64% Real Estate +1.93% Discretionary +1.8% Industrials +1.47% Health Care +1.08% Information Technology +0.52% Materials -0.07% Communication -2.97% * * * * Industry Focus Bank Services 48 34 6 Over the past 6 months, the Bank subsector (KBE) has outperformed the S&P 500 by +11.22%. Its Power Bar ratio, which measures future potential, is Very Strong, with more Bullish than Bearish stocks. It is currently ranked #3 of 21 subsectors. Top Stocks [rating] BPOP Popular, Inc. [rating] BK The Bank of New York [rating] NTRS Northern Trust Corpo * * * * Top Movers Gainers [rating] NEM +12.46% [rating] TYL +9.32% [rating] CARR +9.2% [rating] TER +8.15% [rating] CMG +6.33% Losers [rating] META -10.56% [rating] TXT -9.69% [rating] BMY -8.51% [rating] IBM -8.25% [rating] CAT -7.02% * * * * Earnings Report Reporting Today Rating Before Open After Close LYB, BSX, HLT, CNC, HCA, ETR, PSX, PEP, GE MHK, RJF, TER, WM NSC, XOM, PCG, ROP, RTX, SHW, TROW, ABBV, MSCI, IPG, FTV, FI, CVX, CMCSA, CL, BALL, AON META, NOW, ORLY, V CHTR No earnings reporting today. Earnings Surprises [rating] HES Hess Corporation Q1 $3.16 Beat by $1.43 [rating] NEM Newmont Corporation Q1 $0.55 Beat by $0.18 [rating] AVB AvalonBay Communities, Inc. Q1 $1.79 Beat by $0.56 [rating] EME EMCOR Group, Inc. Q1 $4.17 Beat by $1.26 [rating] TEAM Atlassian Corporation Q3 $0.89 Beat by $0.26 * * * * You have received this e-mail as part of your subscription to PowerFeed. If you no longer want to receive e-mails from PowerFeed, [click here](. You’re receiving this e-mail at {EMAIL}. For questions about your account or to speak with customer service, call [+1 (877) 697-6783 (U.S.)](tel:18776976783), 9 a.m. - 5 p.m. Eastern time or e-mail info@chaikinanalytics.com. Please note: The law prohibits us from giving personalized investment advice. © 2024 Chaikin Analytics, LLC. All rights reserved. Any reproduction, copying, or redistribution, in whole or in part, is prohibited without written permission from Chaikin Analytics, LLC. 201 King Of Prussia Rd., Suite 650, Radnor, PA 19087. [www.chaikinanalytics.com.]( Any brokers mentioned constitute a partial list of available brokers and is for your information only. Chaikin Analytics, LLC, does not recommend or endorse any brokers, dealers, or investment advisors. Chaikin Analytics forbids its writers from having a financial interest in any security they recommend to our subscribers. All employees of Chaikin Analytics, LLC (and affiliated companies) must wait 24 hours after an investment recommendation is published online – or 72 hours after a direct mail publication is sent – before acting on that recommendation. This work is based on SEC filings, current events, interviews, corporate press releases, and what we've learned as financial journalists. It may contain errors, and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility.