Groupmark China Index

The Groupmark China Index moved sideways this week on low volume but the internals continue to deteriorate.  The three charts below show the index performance, the advance decline line, and the number of stocks trading above and below their averages.

The index gained almost no ground this week but the advanced decline moved into recent new low territory.  This increases the odds of a continued corrective phase.

This chart below measures the number of components trading above and below their moving averages and shows the number of companies trading below their 20 and 50 day averages increased this past week.

For further clarification of the above chart, it measures the stocks in the Groupmark China Index trading above or below their moving average.  The thickest green line measures stocks trading above their 200 day average.  The thinest green line measures stocks trading above their 20 day average and the green line in the middle measures stocks above their 50 day average.  The red lines measure stocks below their averages with the thickest being a 200 day average, thinest a 20 day average, and the middle a 50 day averages.

The Groupmark China Index blog and website were created for investors to monitor the general health of Chinese companies trading in the U.S.  Groupmark welcomes your comments.

admin GC Index, Indicators, Uncategorized

The Groupmark China Index continues to push into new recovery high territory.  Volume picked up for the fourth day in a row to 97mm shares the highest volume in several weeks.  Also the list of stocks making 52 week highs increased to 9, another recovery high.

Stocks making new highs.

admin GC Index, Index Leaders caas, cfsg, china, cisg, jst, rino, tstc, vit, WATG

The Groupmark China Index closed at 2206.43 a new high for 2009.  It was accompanied with volume of more than 83 million shares, the heaviest volume in 4 weeks.  Another interesting development is in the new high data.  On Thursday and Friday we had more new highs than any other time this year.

Here are the charts of the stocks that made new highs this week.

Keep an eye on our list of new highs as well as stocks that are starting to move above their moving averages in order to get on board a potential new major trend.

admin GC Index, Index Leaders cfsg, cisg, New HIgh, rino, tstc, WATG

The Groupmark China Index declines this week in light volume.

The Groupmark China Index continues to outperform the Dow Jones Industrial and S&P 500 Index but still suffered losses this week. The index closed the week at 1673.45 – 119.29 or 7%.  It is still supported by its 50-day average that currently stands at 1646.

GMCI, volume and advance/decline line

Although this decline has been accompanied by lower than average volume, the deterioration in the components of the index has been severe.  An indicator that shows this is the number of stocks above and below their 20, 50 and 200 day moving averages. Last Friday, 59 components were trading below their 20-day averages while today there are 82. Last Friday, 27 components were trading below their 50-day average and now there are 58. Keep an eye on the lists of stocks that cross their moving averages in the left hand menu marked Above/Below xx MA this could foreshadow a larger trend.

Here is a graphical representation of the numbers of stocks above and below their moving averages.  The green lines are the number of components above their averages while the red is the number below their averages.  The thickest lines are 200 day averages, next 50 day average and thinnest lines represent the 20 day averages.

Number of components above and below 20, 50 and 200 day average

This deterioration is also reflected in the advance/decline line that has fallen sharply in the last week. (Shown in yellow below the Groupmark China Index)

Let’s see if the index can hold the 50-day average and give us a sign the correction is over next week.

admin GC Index, Indicators

Here’s a closer look at the advance decline line.  (For some it may be a bit too close)

As the market was moving higher in April it was accompanied with more of Groupmark China Index components advancing and fewer declining on pull backs  (see A,B,C, and 1, 2, 3,4).  This was again confirmed as we pushed through our 200 day moving average (see D).  More recently on the last pull back to the 200 day (that supported) it was accompanied with a sharp rise in declining stocks (see 6).  And now finally with this last move into new highs the number of advancing issues did not exceed its previous peak (see D, E).  This could be a sign the index will at least consolidate, and at worst begin a correction.

As Groupmark continues to be bullish on the long-term outlook of the Chinese economy and ultimately that will translate into the Chinese companies continuing to outperform most others in the world, we don’t recommend the buy and hold strategy. Too often small corrections turn into major routes giving up all the hard earned profits. Tighter stops, trimming position or hedging is in order when technical indicators weaken.

admin GC Index

The Groupmark China Index closed lower yesterday after trading in new high ground for this bullish phase. This pattern is referred to as a key reversal day. Key reversal days can be a top of a bullish market phase. What makes this pattern more important is the heavy volume that accompanied the potentially bearish day.

Another sign that this rally may be ready to correct is the advance decline line flattening out while the index pushed into new high territory. This signifies less stocks moving higher with the general trend of the index and could be a sign of weakening internals.

Key trading levels will confirm this pattern, trading below 1555.40 on the index will confirm the reversal day; also the 20 and 200 day moving averages are 1444.56 and 1359.85 these should be support for a healthy market, a close significantly below could be a confirmation of a corrective phase.

admin GC Index

The Groupmark China Index closed today above its 200 day moving average for the first time since June 9, 2008.  The index added 114.03 points to close at 1496.64 a 7 Month high.

The index advanced with heavy volume of 74 million shares almost 2 times the average daily volume.  One industry that continues to lead is solar with Trina Solar Ltd (TSL) closing at 18.07 up 2.17 (52 week range 53 - 5.61).  Canadian Solar (CSIQ) closed at 8.95 up 2.09 (52 week range 51 - 3) and JA Solar (JASO) closed at 4.06 up .56 (52 week range 26 - 1.55).

Other top performing stocks in our index listed below.

admin GC Index, Index Leaders CSIQ, JASO, TSL

The Groupmark China Index closed a quiet week with a good advance.  The index closed at the highest level in nearly 12 weeks ending at 1243.70.  The index stands nicely above its 20 and 50 day moving averages and both averages have turned higher confirming the new trend.  Also confirming the move higher is the advance decline line.

In another confirmation of the uptrend we now have the majority of stocks in the index (86) trading above their 50 day moving average.

Three of the best performing companies in our index are Longtop Financial Technology Limited (LFT), AsiaInfo Holdings, Inc (ASIA) and China GrenTech Corp Ltd.   Longtop Financial Technology provides information technology services to the financial serves industry in China.  Asia Holdings provides telecommunications software solutions and information technology security products to service providers in China.  And GrenTech Corp. manufactures wireless coverage products and services to the telecommunication operators in China.  These types of companies will benefit from growth of the domestic Chinese economy.

Listed in the chart below are other companies that have recently crossed above their 50 day moving average and offer a beginning place to look for new investment opportunities in Chinese companies that trade in the U.S.  markets.

admin GC Index

The Groupmark China Index was created to bring attention to the many small and mid-sized Chinese operated companies that are listed in the United States. Many of these companies are trading at levels far below their U.S. peers and may offer an opportunity to invest.

The Groupmark China Index is constructed to more heavily weight stocks that are fundamentally “cheaper” and are growing revenues and earnings the fastest. Unlike many other market-cap weighted indexes that heavily weight the “wall street darlings” we strive to uncover the companies that are growing their businesses.

Among the heaviest weighted stocks in the index are;

Groupmark is creating the Groupmark China Index web page that will not just keep track of the index components, but will offer technical information that will help pinpoint investment opportunity. For example;

Stocks that are trading with greater then average volume;

Stocks that recently crossed above their 50-day moving average;

Stocks with the largest percentage gain;

Groupmark plans to calculate additional indicators for the financial community to reference.  This data may identify undervalued opportunities hidden within the fastest growing economy in the world, China!

Nicholas Thompson

admin GC Index