Bulls were encouraged by the rally in China exchange traded funds on Tuesday since many analysts keep a close eye on Chinese ETFs as an indicator for the health of the global economy.
The iShares FTSE China 25 (NYSEArca: FXI) was up more than 3% in afternoon trading Tuesday, although the ETF remains in negative territory for 2012.
“Slowing global growth will negatively affect China’s export-oriented economy,” investment researcher Morningstar says in a report on FXI.
From a technical perspective, the China ETF is making a “death cross” as the 50-day simple moving average falls below the 200-day moving average. [ETF Chart of the Day: China]
The last time this pattern occurred was last summer before the August waterfall sell-off.
However, some analysts think the China ETF experienced a “false breakdown” at a key support level from late 2011.