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ASHR: Sabre-Rattling And Trade Wars Make This China ETF A Short Candidate

Ivory Wolf profile picture
Ivory Wolf


  • On-going uncertainty regarding tariff issues and “trade wars” are unsettling global markets as a whole.
  • ASHR is an ETF that is now much more readily available for trade amongst U.S. investors (and other investors around the world alike).
  • ASHR is considered overpriced at current levels based on macroeconomic issues as well as technical indicators.

Context: Why does this opportunity exist? Why is the stock under/overpriced?

On-going uncertainty regarding the tariff issues and “trade wars” that are continually discussed at the present time are unsettling global markets as a whole, which is being reflected within the two primary markets involved – the United States and China. NYSEARCA:ASHR, an ETF covering 300 of the largest, most liquid “A-shares” listed on the mainland Chinese markets, is an instrument that is now much more readily available for trade amongst U.S. investors (and other investors around the world alike) which has been highlighted and described elsewhere recently, although no definitive investment strategy or “call” was recommended within the article.

The article presented here provides a contrarian view to traditional thought (conventionally “buy on the dips”) in that ASHR is considered overpriced at current levels based on the macroeconomic issues currently at hand, as well as the technical indicators which are potentially signifying further declining performance and additional underlying negative sentiment. Further weakness in global markets will be reflected in ASHR, which can be readily traded directly or through the use of options.

Looking at a weekly chart for ASHR (Figure 1), it is clear that a large drop in the price of the ETF occurred during the week ending 09-Feb-2018 (a decrease of 10.8% on significant volume), which has resulted in “sideways” trading between a range of $30-$33 ever since over the past couple of months. As at the close of trade on 06-Apr-2018, the share price of ASHR has settled at the lower end of this range ($30.28) on average trading volume for the week with worsening relative strength (compared to the S&P 500 index) and a declining MACD and Chaikin Money Flow on both weekly and daily charts. One of the most compelling factors to consider is that the price of the ETF has closed below the 30 week moving

This article was written by

Ivory Wolf profile picture
After having taken a few major "hits" to my investment portfolio in the past, I decided to undergo an "educational" phase to learn more about the stock market and various types of investment - Safety in the Market (SITM), Optionetics, swing-trading, Elliott-Wave trading, and technical analysis indicators. As such, my focus on stock market investments has evolved and developed into a more systematic and disciplined process focussing more on technical analysis and trend-following (which is more "in the moment"), rather than fundamental analysis (which tends to be quite outdated compared to current market action). Disclaimer regarding articles written for Seeking Alpha: The past performance of securities or derivatives is not a guarantee for future results. All information offered in these articles do not take into account the reader’s own personal financial situation and investment objectives. As such, the reader should consult with their own independent tax, business and financial advisors for advice with respect to any trade or investment. The level of risk tolerance should be individually evaluated by the reader since options and derivatives are not suitable for all investors. For further information regarding options in particular, please read and consider the “Characteristics and Risks of Standardized Options” available at http://www.theocc.com/about/publications/character-risks.jsp.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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