U.S. investors have been buying Chinese stocks at a record pace.

Normally, that would be a warning sign. But we shouldn't worry about the money moving into China today. Instead, this shift is a sign that the boom can continue. The Chinese government is unleashing stimulus to boost the economy and stock market.

Chinese stocks have jumped 20%-plus since the low last month, even with a slight pullback along the way. And that quick rally has caught the attention – and dollars of more investors. We can see it by looking at the shares outstanding of the two largest Chinese-stock ETFs... the iShares China Large-Cap Fund (FXI) and the KraneShares CSI China Internet Fund (KWEB).

These two funds own different baskets of Chinese stocks. FXI holds the largest Chinese companies that trade in Hong Kong... while KWEB owns foreign-listed Chinese tech stocks. Between the two of them, they have roughly $18 billion in assets. Importantly, ETFs like FXI and KWEB can create and liquidate shares based on investor demand. So, if investors pour money into either fund, that fund will create new shares to meet demand.

This makes shares outstanding a valuable sentiment gauge. When share counts are rising, investors are excited about an idea. And that's exactly what we've seen in Chinese stocks. Shares outstanding have soared for both of these funds since the Chinese government announced reforms," explains Brett Eversole.