If you pay too much attention to the headlines, you’re probably thinking China is uninvestable.
Every week it’s the same story — tariffs, trade tensions, and skepticism around Beijing’s economic data.
It’s clear that sentiment remains in the gutter for these stocks.
However, the reality is that Chinese equities have quietly outperformed the U.S. since the first quarter of 2024.
While many investors continue to debate policy risk and geopolitics, the tape has already been whispering.
The charts tell an undeniably bullish story for China — one of accumulation, rotation, and leadership.
We’ve seen this playbook before: pessimism stays high while prices grind higher. That’s the essence of a bull market — it climbs a wall of worry.
Now, with a primary trend reversal firmly in place, Chinese large caps FXI are pressing against a major polarity zone near 40 — an area that’s acted as both support and resistance for nearly two decades.
Some indecision at this critical level makes sense as the index digests its recent gains.
A decisive breakout above 40 would mark confirmation that the next leg higher is underway — whether the headlines agree or not.
For broad exposure, we want to own FXI above 40, targeting 52.
China has already been one of our most profitable themes this cycle, and we’re betting that continues.
We were early — leaning on blue chips like PDD and BABA during their initial reversals. Then this summer, BIDU delivered one of our best trades of the year — a 32x max return on calls plus a big win on common.
And if we do get this breakout in FXI, we’ll want to lean on fresh leadership — the stocks completing multi-year bases and breaking out to new highs as rotation spreads to new corners of the market.
Here’s our China stock universe, which includes Hong Kong listings, sorted by proximity to new highs:
Now, let’s discuss how we’re trading some of these new leaders:
Our first setup is a $500M chinese fintech stock. This is Qudian Inc $QD:
Qudian is putting the finishing touches on a deep multi-year reversal base.
Price is coiling tightly against the IPO VWAP near 5.10. A decisive breakout above that level would complete the pattern and open the door for a powerful leg higher.
Above 5.10, we want to be long QD, targeting 9.25 in the coming 3-6 months.
Qudian is putting the finishing touches on a deep multi-year reversal base.
Price is coiling tightly against the IPO VWAP near 5.10. A decisive breakout above that level would complete the pattern and open the door for a powerful leg higher.
Above 5.10, we want to be long QD, targeting 9.25 over the next 3-6 months.
Next is Xpeng $XPEV, which is completing a primary trend reversal as the Strazza Indicator signals volatility expansion is underway.
We anticipated the upside resolution in this one and already sold some doubles in our Breakout Multiplier calls.
Now we’re riding free with a brand-new uptrend. Here’s a look:
If we’re above 24, this base is in, and the path of least resistance is higher. We’re targeting the old all-time highs around 74 over the long term.
