Global investors panic over Iran and oil — capital is rotating into cheap Chines
Thesis
As US strikes on Iran send oil prices higher and tanker traffic through the Strait of Hormuz to a trickle, global equities are broadly selling off. However, this macro panic seems to be accelerating a rotation into lagging Chinese tech stocks. Bloomberg highlights that Alibaba just had its best day in 10 months on growing earnings optimism. MarketWatch confirms the narrative that investors are looking for catch-up trades in China tech. Connecting the dots, if the Middle East conflict squeezes global margins, capital may flee to cheaper, geographically insulated Chinese internet stocks that have already priced in years of bad news.
Strategy approach
Build a rule-based strategy that enters long BABA (Alibaba ADR) when crude oil futures (CL=F) increase by more than 2% on a daily (D1) basis. Set a profit target of an 8% gain from the entry price. Use a 5% stop loss. The maximum holding period should be 21 days.