first majestic silver

The China Syndrome

Technical Analyst & Editor
July 23, 2005

Introduction

As always, I'm not here to debate the fundamentals, but to alert my subscribers when a special opportunity presents itself. As we all know by now, China announced the long awaited removal of its "Yuan" pegged to the dollar, and allow the Yuan to float according to a certain percentage of a "special basket of currencies". This story will no doubt be the center of focus for the media for weeks to come, but in the meantime, the CHN I've been tracking is coming alive…

In January this year, I wrote a special report on China, and the ETF to watch was CHN. Here is a description for those who are not familiar with CHN…

The Fund is a closed-end management investment company seeking long-term capital appreciation primarily through investment in the equity securities of companies engaged in a substantial amount of business in the People's Republic of China. The China Fund, Inc. is traded on the New York Stock Exchange with the ticker symbol "CHN". The Fund's investment manager is Martin Currie Inc. The Fund's direct investment manager is Asian Direct Capital Management.

CHN - three things we are looking at here:

  1. we have a TLBBS (buy signal) this week.
  2. There has been a heavy accumulation for the past few weeks.
  3. The day the announcement was made (7/21), CHN broke out on very heavy volume at the same time triggering one of our proprietary buy signals.

From a longer term perspective, I've been watching CHN since the correction began in 2004. The volume was heavy leading up to the peak, and volume has been almost non existent during the past 18 months when CHN has been consolidating.

But what is interesting, is that the cycles of tops and bottoms on the CHN is almost exactly the same as two other sectors I cover…

Precious metals….

and the Nasdaq.

Summary

The China story is the story right now, and a simple way to participate is thru CHN. I have added CHN to my roster of ETFs, and let our trading model guide us in and out. CHN appreciated over 300% during the last major buy cycle from Oct 2002 to Dec 2003, out performing any sector or ETFs, and it could do even better during the next major cycle, since more investors have now caught on to the China story. I'll be sending out alerts to subscribers in the next few days, although we may have to liquidate some of our current profitable positions in other sectors so that we can begin to accumulate CHN.

Peace and profits,

 

Jack Chan at www.traderscorporation.com

23 July 2005

Jack Chan is the editor of Simply Profits, established in 2006. Chan bought his first mining stock, Hoko Exploration, in 1979, and has been active in the markets for the past 37 years. Technical analysis has helped him filter out the noise and focus on the when, and leave the why to the fundamental analysts. His proprietary trading models have enabled him to identify the NASDAQ top in 2000, the new gold bull market in 2001, the stock market top in 2007, and the US dollar bottom in 2011.


In 1934 President Franklin Delano Roosevelt devalued the dollar by raising the price of gold to $35 per ounce.
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