The Black Cross Society

In technical analysis parlance, a black cross (sometimes known as a death cross) occurs when an index’s falling 50-day moving average meets its rising 200-day moving average. And as the ominous name suggests, this is not a positive development for a sector. In fact, it usually signals the return of a very serious bear market.

Well, let’s take a look at the chart below of the iShares FTSE/Xinhua China 25, the key index that measures the health of China’s stock market. As you can see, the 50-day moving average (blue line) has fallen down to just about where the 200-day moving average (red line) has climbed.

This near black cross could be a very bad sign for stocks in what until recently has been one of the hottest financial markets in the world. If we do see this black cross take place on FXI, then inverse exchange-traded funds (ETFs) that move higher when the Chinese market falls will be the place to collect some really big profits.

Right now, subscribers to my ETF Trader advisory service are perfectly positioned to take advantage of the potential collapse of the Chinese markets. We’re also well-positioned to take advantage of the wider sell-off in emerging markets tied to China’s fortunes.

If you want to get your portfolio out in front of the black cross, then simply click here.