This Week in China: Death Cross Shows Fatigue in Reopening Trade

Only six months since the China reopening trade triggered the world’s best stock gains, investors have stopped believing in the market’s upward trend.

A death cross — where a short-term moving average crosses below a longer-term equivalent — has recently appeared on the MSCI China Index. While chart purists might argue that the pattern is stronger when both lines are sloping somewhat downwards (like in September), it’s yet another in a string of signals affirming the prevalence of bearish sentiment in Chinese markets.

Take positioning. Short interest in the iShares MSCI China ETF, the largest China-focused fund listed in ...