Cabot China-Timer
By
Paul Goodwin, Analyst and Editor of
Cabot China & Emerging Markets ReportThe
Cabot China-Timer is a trailing market indicator that uses the performance of the Halter USX China Index to gauge the trend of emerging market stocks.
The China-Timer is considered to be positive when the Halter Index—which is composed of over 90 Chinese stocks that trade on major U.S. exchanges as American Depositary Receipts or ADRs—is above the lower of either the 25-day or 50-day moving average. When the Index falls below both its 25- and 50-day moving averages, the China-Timer turns negative and the Cabot China & Emerging Markets Report adopts a defensive stance. The China-Timer will not be considered as having turned positive until the level of the Halter Index once again moves above either the 25- or 50-day moving average, and that average is itself trending upward.
While the Cabot China-Timer is based entirely on the movement of the Chinese ADR market, it is considered to be a proxy for the general level of risk tolerance in investors. If investors are leaving Chinese stocks, they will also be exiting Brazil, Russia, India and the other emerging markets.
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