Dec. 3, 2009 (Chinavestor) Index futures got firmer following a better-then-expected jobs data this morning. China stocks continued to climb in Hong Kong but succumbed to profit taking in Shanghai. The Hang Seng Index advanced 7.2% since last Friday shrugging off Dubai's woes. China Eastern Airlines (HKG:0670) (NYSE:CEA), Aluminum Corp. of China (HKG:2600) (NYSE:ACH) and Yanzhou Coal (NYSE:YZC) pulled the index as commodity prices strengthened on the weaker dollar. Chinese airliners reported strong passenger traffic growth and CEA's merger with rival Shanghai Airlines (SHA:600591) set a stage for a dominant position for CEA over the skies of China's financial hub, Shanghai.
Chinese ADRs are far from overbought, a bullish statement before the opening bell. Expect Chinese ADRs with strong momentum from last week to carry on but avoid those that fell on weak earnings. For a stocks specific readings, please visit today's overbought/oversold report.
The strong performance of the Hang Seng index and the Shanghai Composite is clearly reflected in today's overbought chart below. This makes a strong case for their tracking ETFs, such as the Morgan Stanley China Fund (NYSE:CAF) or the FTSE/Xinhua 25 China Index (NYSE:FXI). The relative weakness of the China real estate ETF (NYSE:TAO) suggests buying into weakness makes perfect sense this time.