Shares in China have been falling alongside U.S. stocks and related exchange traded funds (ETFs) have also been victim to this.

iShares FTSE/Xinhua China 25 Index Fund (FXI) is down 14.9% over the last three months, after a strong period for Chinese equities overall in 2007. However, even after the decline, FXI is still 200% or more above its levels two years ago.

Frederic Ruffy of Optionetics for Inside Futures says that although the long-term looks bullish, short-term outlooks aren’t fruitful.

Further weakness in global equities may be the trend as there is a correlation between many global markets along with the U.S. equity markets. Over the last 90 days, FXI has correlated 72% with the PowerShares Trust Series (QQQQ).

ProShares Ultra Short/Xinhua China 25 Fund (FXP) allows investors to catch the upside to the downside. Bullish or bearish – you have options.


The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.