Far East

Gold Wants a 3 Handle:

Is the shiny precious metal sniffing out something ominous on the horizon? Of course, no one knows but its recent PRICE action which is what we focus on is telling us the path to least resistance is higher. The MONTHLY chart below shows it higher 7 of the last 10 and is looking for another advance in August. For the time being it is shrugging off weak seasonality factors, as like overall markets it is within the soft August-September time period and the break above the bull flag suggests a measured move to the very round 3000 number, which may or may not happen, and if it does occur could take years or sooner. The WEEKLY timeframe shows another break above a bull flag but at the 2450 pivot and Gold can still come back in 75 handles to retest the move before resuming its uptrend and would remain firmly intact. Notice RSI clinging to the overbought 70 RSI number for most of 2024 and we know there is nothing more bullish than an overbought situation that remains that way. Finally, the daily chart has some nice attributes as it twice broke above the range between 2300-2450, and fell back into it which both now look like bear traps.

Regional Bounces:

In our last Looking Abroad Note we suggested it was time to buy Japan after the mini-crash in the Nikkei, and could now be the time for China? It did record a nice week as a few 13Fs reported stakes (remember this information tends to be stale) in some internet names and others, so it may be an "artificial" boost and it probably makes sense to be patient and let some of these instruments digest the move. The daily chart of the FXI below shows some green shoots, although I would like to see several consecutive CLOSES above the 50-day SMA. The Bollinger Bands suggest a big move is imminent, but this indicator is ambiguous as it does not predict a direction, just a powerful one. Here are the actual Bollinger Bands on the FXI and notice when they constrict outsized moves tend to follow. BABA is one to watch in the overall region as it shrugged off early weakness Thursday after earnings and produced its first positive reaction in its last 5 and now looks poised to travel toward the very round 90 number in a cup base that started there with the spinning top on 5/17. A break above an 89.79 pivot could be robust as we know names that trade through the very round 90 number often reach par and beyond.

Recent Examples:

In our 8/6 Looking Abroad Note we looked at the Amazon of South America in MELI. We admired the back-to-back positive earnings reactions, especially the 8/2 session where it roared more than 10% in the middle of the 3-day massacre in the S&P 500 which fell more than 6% between 8/1-5. That type of strength during a stock market rout should have been admired by all as names that display that type of behavior will often be the first out of the gate when the market catches some love. Well, that is exactly what happened and MELI is now on a 4 week win streak with the last 3 CLOSING at the top of the WEEKLY range gaining a combined 19%. Stanley Druckenmiller disclosed a new position in the name in his latest 13F and the stock is now near all-time highs, and round number theory is coming into play at the very round 2000 number as it potentially makes its way to a measured move of 2050. The MONTHLY chart shows it focused now on a cup base pivot of 2020.10 in a base that started in January 2021. As far as the MELI comparison to AMZN notice the superior action here with MELI in the green color. Expect this relationship to continue.

PDD Holdings:

Chinese retailer up 2% YTD and 87% over last one year period.
Name 9% off most recent 52-week highs (compare to BABA and JD now 14 and 18% off their respective annual peaks) and I would not be surprised to see this climb toward MONTHLY cup with handle pivot of 164.79 by year-end in pattern that started in February 2021 (notice January and February that year repelled at very round 200 number).
FOUR straight positive earnings reactions up 1.1, 3.5, 18.1, and 15.4% on 5/22, 3/20, 11/28, and 8/29/23.
Enter on pullback into double bottom breakout.
Entry PDD 147. Stop 141.50.

Luckin Coffee:

Chinese casual diner down 25% YTD and 30% over last one year period.
Name 47% off most recent 52-week highs and WEEKLY chart recorded doji candle last week which is adept at signaling potential changes in the prevailing direction and occurred after prior week jumped 6% recording bullish piercing line candle. Notice positive WEEKLY RSI throughout first half of 2024
Earnings reactions mixed up .1 and 1.7% on 4/30 and 11/1/23 and fell 6.7 and 1% on 7/30 and 2/23.
Enter at very round 20 number/50 MONTH SMA support.
Entry LKNCY here. Stop 19.25.

MINISO Group Holding:

Chinese retailer down 25% YTD and 25% over last one year period. Dividend yield of 2.7%.
Name 49% off most recent 52-week highs and MONTHLY chart shows potential bearish head and shoulders pattern with neckline at 14. Volume has been tailing off last couple months. Notice three straight spinning tops between September-November 2023 started recent downtrend.
Earnings reactions mixed up 1.7 and 9.8% on 3/12 and 8/22/23 and fell 4.7 and 9.7% on 5/14 and 11/21/23.
Enter on pullback into WEEKLY bullish piercing line candle
Entry MSNO 15. Stop 14.25 (REPORTS 8/30 after close).

Good luck.

Entry summaries:

Buy pullback into double bottom breakout PDD 147. Stop 141.50.

Buy at very round 20 number/50 MONTH SMA support LKNCY here. Stop 19.25.

Buy pullback into WEEKLY piercing lince candle MSNO 15. Stop 14.25.

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