Combine China and Internet stocks under the umbrella of a single exchange traded fund and that ETF is destined to sport the momentum label.
That is true of the KraneShares CSI China Internet Fund (NasdaqGS: KWEB). KWEB’s status as a momentum play has been on display in the past, in positive and negative fashion. The ETF debuted in August 2013 and finished the year with a 27% gain.
However, KWEB was not immune to the March/April momentum sell-off. In fact, the struggles for Chinese Internet stocks, in some cases, lasted into May. From its March peak to its May trough, plunged 26.2%, entering a bear market in the process. [Momo ETFs Hammered]
To be fair, KWEB has surged 17% since May 8 and there are signs the ETF’s momentum is increasing…in a good way.
“The daily chart is building positive momentum, with the 20-day EMA crossing above the 50-day MA, and the 50-day MA flattening out,” notes Deron Wagner of Morpheus Trading Group. “Both averages are above the 200-day MA, which is pointing higher as well. KWEB should continue to hold $35 and eventually set a new swing high with the 50-day MA beginning to turn up. A break of the 200-day MA would kill the setup in the short term and force us to exit.”
KWEB is destined to be in focus over the next several weeks as Alibaba’s initial public offering nears. On Thursday, the Chinese e-commerce giant announced it will list its shares on the New York Stock Exchange under the ticker “BABA.”