Profit taking pulled China stock indices lower in Asia on Tuesday. The Shanghai Composite Index <.SSEC> fell 15.95 points or 0.54 percent to 2,959.36 points while the Hang Seng Index <.HSI> shed 149.78 points or 0.81% to 18,378.73. But despite the decline the Hang Seng completed its best quarterly performance in a decade while the Shanghai Composite is at its peak for 2009. Strong economic news from China are behind such stellar performances and the question is now how long can China stocks continue such a rally?
The outlook for American listed Chinese stocks is bright ahead of the bell on Tuesday. Index futures point to a slightly higher open ahead of a bunch of economic data. Chinese ADRs are ready to rally from a technical point of view. The number of China stocks trading above their 50-DMA is increasing, a positive sign. Another encouraging signal is that not a single American listed China stock is overbought and the number oversold of China stocks is decreasing. The relative strength indicator is still under 50 means that upside potential is there for China stocks.
Monitoring the actions of institutional investors Yanzhou Coal (1171.HK: Quote, Profile , Research) (YZC: Quote, Profile , Research) is still attracting lot of attention in Hong Kong. Strong money flows suggest that YZC's rally is sustainable at this point.