NEW YORK (Real Money) -- After a huge run in late March and early April, is China about to turn into the Year of the Dog, a year when stocks wind up chasing their tales? Sprinting early and then fading late? It's probably a little early to come to that conclusion, but there are several warning signs hitting the daily charts we should consider before hopping back into the hot Chinese market.
Rather than use a broad-based exchange-traded fund, I'm simply going to look at two companies with a combined market cap of $300 billion. These two come in at #3 and #4 in terms of market cap of Chinese stocks trading here. Of course, I'm talking about China Life Insurance (LFC) and China Petroleum and Chemical (SNP).
I found these charts to be very similar to not only each other, but many of the broader Chinese ETFs. It's tough these days to tell if the dog wags the tail or the tail wags the dog, but when I'm looking for outsized moves, I'll stick with individual names, and that starts with LFC.
LFC is already off its highs of May by 11%, so seeing the oversold reading in the slow stochastic or the dip in the RSI should be no surprise. And these may portend a bounce. They may, but when I compared this bounce to the one in March, I saw some differences.