A new bullish market has been born

The setup for Australian stocks, commodities, and China-facing stocks listed in the US could not look more bullish. And it seems we’re witnessing the birth of a brand-new bull market.

What are we seeing? Iron ore prices rose 10% on Monday, seeing the price of the key iron ore ingredient break out of its downtrend to US$112. Australia’s share market $S&P/ASX 200 (.XJO.AU)$ hit a record all-time high on Monday after rising for three consecutive weeks. China's market, as measured by the CSI 300 Index $ChinaAMC CSI 300 Index ETF (03188.HK)$, went ‘parabolic,’ rising 8.5% on Monday and breaking out of its short, medium, and long-term downtrends while continuing to gap higher after rising 16% last week, indicating real oomph and strength in these moves. Today's move is the biggest one day gain China's market has seen since 2008 $CSI 300 Index (800122.HK)$.

What changed? Looking at money pouring into ETFs globally, we’ve seen institutions buy heavily into China’s stock market with the market believing the time is now to buy into Chinese stocks as 'this time is different' as China's stimulus big guns have been brought out. Chinese ETFs received the second-most flows of all the global ETFs so far this month. I can't tell the you last time I saw this. The most flows went into S&P 500 ETFs. But now Chinese ETFs are are making a run for it.

Today's data showed China's economy has begun to turn a corner despite stimulus making its way through to the economy. Today’s PMIs showed China grew more than expected. September’s PMIs rose to a reading of 49.8, from 49.1. But as it’s under 50, it indicates there's plenty more room to run. China’s Services PMI rose further into expansionary territory, up to 50.4 from 50.1.

But as the nation continues to grows, commodity buying will likely increase, and that will support Australia's economy and the ASX. And this is still on the eve of China launching its biggest ever stimulus package. So what do you need to consider now?

Trading and investing ideas

1 - New Quarter and month - consider your strategy
As we wrote this morning, the final quarter of the year is traditionally the best for stocks. October is historically a strong month for shares as well, with the S&P 500 gaining 1.6% on average, followed by a gain of 2.3% in November and 1.1% in December (these are the averages over the last 30 years). So consider being invested where money is starting to flow.

2 - China’s stocks see huge institutional flows and mass ‘dip buying’
China’s market, as measured by the CSI 300, has broken out of its long-term downtrend and entered a parabolic phase of gains supported by stimulus, at a time when China just started turning a corner. Institutions believe this time is different; China can finally start to see explosive growth. So we’ve seen Chinese ETFs tracked by the CSI 300 garner the second-highest ETF flows so far this month. The most fund flows, however, have gone into the S&P 500’s SPY. Here are some ETFs to consider. And see below **

3 - Watch stocks making moves on the ASX
On Monday, on the ASX, we saw everything and anything that could benefit from China’s stimulus run up, perhaps a sign of the times. From local gambling company Star Group $The Star Entertainment Group Ltd (SGR.AU)$ lifting 19%, to building and construction stocks such as James Hardie $James Hardie Industries PLC (JHX.AU)$ and Fletcher Building $Fletcher Building Ltd (FBU.AU)$ rising about 6% each, to iron ore giants like Fortescue $Fortescue Ltd (FMG.AU)$ and iron ore and lithium giant Minerals Resources $Mineral Resources Ltd (MIN.AU)$ rise 5%. Meanwhile, Liontown $Liontown Resources Ltd (LTR.AU)$ and Pilbara Minerals $Pilbara Minerals Ltd (PLS.AU)$ continue to make gains after rising double digits last week, rising 22% and 13%, respectively with many believing the lithium bottom is behind us. For more potential trading ideas watch our Weekly update. We also cover why you need to watch copper stocks and ETFs such as WIRE $Global X Copper Miners ETF AUD Inc (WIRE.AU)$

https://www.youtube.com/watch?v=2bMU1kLytng&t=255s