The US once again extended the tariff deadline for China, causing Chinese equities to improve significantly over the past week.

Several Chinese internet stocks reported earnings, with many of the top companies in the sector beating estimates. Last Friday, a record $4.6 billion dollars’ worth of Chinse ETFs were purchased overnight, which is six times the one-year average (source: chinalastnight.com). Additionally, volume in China’s stock market on both the Shanghai & Shenzhen exceeded RMB 100 trillion for the first time ever, which is 190% of the1-year average (source: chinalastnight.com). These events have been a catalyst for further technical improvement to an asset class that has already made tremendous year-to-date progress.

The KraneShares CSI China Internet ETF (KWEB) moved up 5.6% over the past week to complete a bullish catapult at $37.50, marking its third consecutive buy signal. Since the tariff sell-off in early April, KWEB has continued to improve with a series of higher tops and bottoms. Additionally, the fund moved into a positive trend last month and reversed into a column of Xs against the market within the past week, showcasing the recent strength within KWEB. The fund maintains a fund score of 5.77, well within actional territory, with a score direction of 2.97 points. For those interested in income, KWEB is accompanied by a yield of 2.9%. Initial support is at $34.50, with additional support at $33.50. Resistance can be seen at $38.

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.