How to Prep for More Declines in Chinese Stocks

“We have seen a lot of weakness recently, but the divergence that’s been occurring between the S&P 500 and China is significant,” Todd Gordon of said in an interview with CNBC. “And it actually goes back prior to this period of tariffs that are being applied.”

Some traders are taking contrarian views of Chinese stocks. YANG’s bullish counterpart, the Direxion Daily FTSE China Bull 3X ETF (NYSEArca: YINN), is averaging daily inflows of $1.14 million over the past month, according to Direxion data. Over the same period, inflows to the bearish YANG are just over $91,000 per day.

“Despite a rough October, U.S. stocks have held up significantly better than their Chinese counterparts. In just this month alone, the large-cap Chinese stock-tracking ETF (FXI) has plunged 10 percent, amplifying the ‘monster divergence’ Gordon said has been occurring virtually all through 2018,” according to CNBC.

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