Below is a brief excerpt transcribed from Tuesday's edition of The Macro Show hosted by Hedgeye CEO Keith McCullough.
Let's take a look at China.
Some big and ugly moves recently. We got a newsy day with the Chinese virus. But if you were paying attention, you would have seen a big oversold signal in the Hang Sang. Its return all of a sudden went away.
Just take a look at the chart below.
Its like, “year to date...! year to date...! year to date...! then down to date.” Oops. You just lost all of your YTD returns in a day. You don’t want to do that to yourself.
That’s one way to think about selling at the top end of the risk range. It’s a risk management tool so that you are taking down your exposure when things that you own are overbought.
Now whether you’re long the Hang Sang, Chinese consumer stocks, or the Shanghai Comp as an index, all of those things were at the top end of the range the week before Friday.
So there's plenty of opportunity here to buy Chinese consumer stocks. And don’t forget the Emerging Markets index has a large chunk of consumer stocks from China and South Korea.
That’s what I’ll be looking at. Not the Chinese virus. I'm not going to set my hair on fire over that.