A consistent them over the past few months has been the ongoing trade talks between the United States and China, with President Trump indicating in recent days that he may visit China’s Xi “in the not-so-distant-future” (source: chinalastnight.com). As the need to reach a deal continues to increase, we can expect for there to be many more updates on tariff talks and trade deals in the next few weeks. International equities, including and especially Chinese equities, have a tremendous year-to-date performance thus far. However, the strong performance could be further influenced by the outcomes of these trade talks, as favorable deals could further improve the performance of international equities, while unfavorable deals could lead to further uncertainty and potential corrections in the market.

The KraneShares Bosera MSCI China A 50 Connect Index ETF (KBA) provides exposure to mainland China-listed companies that trade on the Shanghai and Shenzhen stock exchanges, diversifying holdings among various sectors. KBA completed a bearish signal reversal earlier this month, after reversing from three consecutive sell signals. The fund did move into a negative trend in April after hitting a low below $21 but has shown notable technical improvement since then. KBA maintains a current fund score of 5.53, with a positive score direction of 2.11 points. The fund currently sits in overbought territory, so wait for the 10-week trading band to normalize before considering. Initial support is at $21. Resistance can be seen between $26-$26.50.

The table below is a review of important technical data on a select group of KraneShares ETFs. Significant changes within the past week are highlighted in Green if positive or Red if negative. This portfolio is designed to be used as a "radar" screen to bring your attention to potentially important technical changes that may require your attention and potential action. When evaluating the Fund Score, the strongest issues have scores of 4 or higher while those ETFs with scores below a 3 are no longer considered solid citizens.

The distribution curve places each ETF on a bell curve according to their respective degrees of overbought or oversold status using a 10-week distribution. ETFs that are statistically oversold will appear on the left-hand side of the bell curve, while those that have become statistically overbought will appear on the right-hand side of the bell curve. Perhaps the most useful attribute of this feature is that it displays the entire universe on the curve at one time to give us a general picture of whether the KraneShares ETF universe is generally overbought on a near-term basis, or generally oversold. Our best opportunities are to buy strong relative strength ETFs that have regressed back toward mean conditions based on market weakness, or have become oversold based upon extreme market weakness. Weekly Distribution is a short-term gauge that is most helpful in timing entry and exit points, while the longer-term information of trend and relative strength is a more controlling factor in the decision of whether to buy or sell.

Legend:

• UPPERCASE indicates that the RS chart is on a buy signal.
• lowercase indicates that the RS chart is in a sell signal.
• GREEN lettering indicates the ETFs trend chart is on a buy signal.
• RED lettering indicates the ETF is on a sell signal.
• Box Color indicates the Sector Status Rating. Green = Favored, Yellow = Average, and Red = Unfavored.

The KraneShares Dynamic China Rotation Model is designed to identify major themes in the Chinese marketplace through the use of the Point & Figure relative strength tools. For more information on the portfolio construction and back testing, see the model info file on the models page.  (Note: The KraneShares ETF Models will be updated Tuesday mornings by 9:30 am EST) 

Weekly Changes: 

* - Dates prior to 10/15/2019, which is when the KraneShares Dynamic China Rotation Model became available on the NDW Research Platform, are representative of when the position was added to the backtested model.