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The Big Breakout You're Not Hearing About

By Jeff Clark
Tuesday, July 29, 2014

Chinese stocks are breaking out... But you won't see it mentioned in the mainstream press.
 
The Shanghai Stock Exchange Composite Index (the "SSEC") – China's version of the Dow Jones Industrial Average – rallied last Thursday... and broke a five-year consolidating-triangle pattern to the upside. This suggests Chinese stocks are about to rally.
 
And early investors could make double-digit gains over the next few months...
 
Take a look at this long-term chart of the SSEC...
 
SSEC stock chart
 
The SSEC has been stuck in a bear market for the past six years. It's down more than 60% from its peak in 2007. But on Thursday, the index broke out of a five-year consolidating-triangle pattern.
 
This is such a long, drawn-out pattern that you can barely see the breakout on the eight-year chart. But there's no mistaking it on the one-year chart...
 
SSEC stock chart
 
This is a BIG DEAL. This is when new bull markets begin. And as I told you in May, the last time the SSEC emerged from a pattern like this, it rallied 500% in a year and a half.
 
I'm not looking for those types of gains this time around. But at the very least, the SSEC should be able to hit some of the overhead resistance lines on the long-term chart.
 
The first target is at about 2,500. If the SSEC can rally above that first resistance level, the next upside targets are 2,900 and 3,500. Based on current levels, investors could see gains of anywhere between 38% and 67% in the next few months.
 
It has been a long time since traders have had a chance to make money buying Chinese stocks. But we have a good opportunity right now. Last week's breakout from the consolidating-triangle pattern signals a major change in trend. And early investors could make double-digit profits in the next few months.
 
Now is the time to buy Chinese stocks.
 
Best regards and good trading,
 
Jeff Clark


Further Reading:

"Places like China, Greece, and Russia aren't the most savory places to invest today," Steve Sjuggerud writes. But "if you don't at least have these beaten-down emerging markets on your radar, you're making a mistake. They're the best value in the world today." Get all the details here.
 
When things get "bad" for an asset, most people can't stand the idea of owning it. So you'll often see extreme negative sentiment before a "bad to less bad" rally. Steve has been using this idea for years to spot low-risk, high-reward investment opportunities. Learn how to profit using investor sentiment in this interview with Steve.

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Market Watch
Symbol Price
Change
52-Wk
S&P 500 1980.34 +0.1% +17.1%
Oil (USO) 37.77 +0.0% +1.5%
Gold (GLD) 125.45 -0.3% -2.6%
Silver (SLV) 19.73 -0.7% +2.1%
U.S. Dollar 81.00 0.0% -0.8%
Euro 1.34 -0.2% +0.9%
Volatility (^VIX) 12.61 -0.6% -0.9%
Gold Stocks (^HUI) 241.52 -0.1% -5.6%
10-Year Yield 2.49 +0.8% -2.7%

From The Crux
World ETFs
Symbol Price
Change
52-Wk
India (IFN) 25.77 +0.2% +30.5%
S. Africa (EZA) 71.91 +1.2% +23.0%
Taiwan (EWT) 16.19 +0.2% +20.1%
USA (SPY) 198.07 +0.2% +19.4%
Israel (ISL) 17.98 +0.4% +19.2%
Canada (EWC) 32.68 +0.1% +19.0%
China (FXI) 40.96 +1.9% +20.3%
S. Korea (EWY) 66.21 +1.4% +19.0%
Lat.America (ILF) 40.86 -0.2% +13.2%
Singapore (EWS) 14.08 +0.3% +8.3%
Japan (EWJ) 12.21 +0.7% +8.8%
Russia (TRF) 14.07 -0.8% +1.5%

Sector ETFs
Symbol Price
Change
52-Wk
Biotech (PBE) 43.09 -0.6% +32.0%
Transportation (IYT) 149.45 -0.9% +30.4%
Big Tech (QQQ) 96.99 +0.3% +30.7%
Semis (PSI) 21.86 +0.4% +31.4%
Basic Mat (IYM) 88.44 +0.4% +26.6%
Health Care (IYH) 130.08 +0.2% +22.1%
Defense (PPA) 32.06 -0.1% +22.1%
Industrials (IYJ) 102.43 -0.4% +18.5%
Consumer Svcs (IYC) 124.23 +0.2% +15.5%
Media (PBS) 25.60 +0.2% +15.0%
Software (PSJ) 36.31 -0.4% +15.1%
Utilities (XLU) 42.94 +1.2% +13.2%
Alt. Energy (PBW) 6.50 +0.5% +13.4%
Insurance (IAK) 47.04 -0.7% +10.8%
Financials (IYF) 83.69 +0.1% +12.3%
Real Estate (IYR) 73.30 +0.8% +11.8%
Water (PHO) 25.75 -0.2% +11.1%
Construction (PKB) 21.63 -0.8% +10.3%
Telecom (IYZ) 30.42 +0.1% +10.5%
Retail (PMR) 33.48 -0.5% +3.5%