Tech: US vs CHINA

2022年1月10日

In the daily chart there are two indexes related to the tech sector:
- NASDAQ 100 NDX for the American market
- NASDAQ OMX CHINA TECHNOLOGY CCHXN9000 for technology companies that are domiciled in China or Hong Kong

From 2020 until today the two markets have have had an upward trend (albeit with different speeds) until the first months of 2021. Their trends has had a correlation close to 1 until the reversal of the Chinese technology market, while the American market continued in the upward trend. Obviously, with these opposite trends, the correlation reversed, reaching values ​​below -0.50 during summer/autumn 2021.

In the following chart, there are the same indexes from 2017 to today with weekly timeframes.



NDX and CCHXN9000 have moved in the same direction, albeit with different speeds, but opposite values ​​such as the current ones have never occurred with such extreme values ​​(opposite direction and very large gap).

By extending the interval to 2013, the gap is more evident:



Without going into the merits of internal policy and geopolitical considerations between China and USA, nor about the economic reason behind these values; the charts of the last few months show different interesting pattern.

The NASDAQ 100 NDX will test the validity of its uptrend in the next few sessions.



At the end of 2021 the index failed to mark new highs ATH, but fell in the zone 15.550-15.700, current area of ​​static support zone (previous resistance) but also dynamic support (lower trendline of the upward channel); furthermore, indicators show a bearish divergence, a symptom of the index's loss of bullish momentum.

An opposite situation can be found in NASDAQ OMX CHINA TECHNOLOGY CCHXN9000.



A bearish trend can be seen throughout 2021, with indicators showing bullish divergence, a symptom of loss of bearish momentum.

The divergences in the two markets could cause the gap to narrow as the NADAQ significantly outperformed the Chinese index over the course of 2021.

It might be interesting to set up a LONG / SHORT strategy, using for example two ETFs (even if the benchmark may be different):
- LONG KWEB
- SHORT QQQ


Dr. Cunti Mattia, CFTe®, EFA


** WARNING **
The content of the analysis just carried out is the result of personal opinions and does not constitute a solicitation to buy or sell any financial instrument.
These views therefore do not constitute advice or a recommendation to invest or disinvest.
The analyzes are for informational purposes only, and do not constitute personalized advice, as the writer does not know the personal characteristics of any of the readers, especially income flows, ability to bear losses, equity consistency.