Michael Burry Is Buying China and Shorting the Nasdaq. Here's How I'd Test That Trade
By Alpesh Patel OBE, hedge fund manager and author
Short answer: Michael Burry thinks Hong Kong-listed Chinese shares are cheap and the Nasdaq is near a top. He may be right on value. But value tells you what might be worth owning, not when. For a country, a sector or an ETF, my rule is simple: I want the monthly MACD rising to confirm the trend, and the weekly MACD rising for the timing. As of 19 October 2026, neither the China ETFs nor the Nasdaq have given that signal in Burry's favour. So my process says: watch, don't jump.
What has Michael Burry actually done?
Burry, the investor made famous by The Big Short, has been telling his Substack readers two things.
He's bullish on China. He has added to electric car maker BYD and also holds JD.com, Tencent, Meituan and hotpot chain Haidilao, calling Hong Kong stocks undervalued, according to Oninvest, as reported by Benzinga on 14 October 2026. He has avoided Alibaba because it is issuing new shares to pay for AI infrastructure.
He's bearish on US tech. He has rolled almost all his short bets into put options on the Nasdaq-100 (expiring April 2027) and on the VanEck Semiconductor ETF, SMH (expiring June 2027). "I believe we are within 0-9 months of a significant top," he wrote.
It's a classic contrarian pairing: buy what's unloved and cheap, bet against what's loved and expensive.
Why I don't simply copy famous investors
I have a lot of respect for Burry. He's brilliant at finding things that are mispriced. But brilliance and timing rarely live together.
In February 2023 he tweeted one word: "Sell." I replied: "Wrong. Buy." What followed was one of the strongest rallies in years. I wrote about it in Michael Burry said "Sell." I said "Buy." Who was right?
The point isn't who was right that time. The point is that a famous name is not a process. Burry can afford to be early. He uses options with fixed expiry dates, sizes his positions as a professional, and can live with being wrong for a year. Most private investors can't. And copying a portfolio you only see part of, months late, is not the same as owning his trade.
My rule for countries, sectors and ETFs: monthly for the trend, weekly for the timing
When I'm deciding whether to own a whole market, such as China, or a sector ETF, I don't start with a story. I start with the trend.
The tool I use is the MACD (moving average convergence divergence). It compares a faster moving average of the price with a slower one. When the MACD line is rising, momentum is improving. I've explained why it lags, and why that's fine, in MACD signals: why they lag and how investors use them.
Here's how I read it:
Monthly MACD | Weekly MACD | What it means in my process |
|---|---|---|
Rising | Rising | Trend and timing agree. This is when I'd consider buying. |
Rising | Falling | Trend intact, short-term pullback. Hold if you own it; wait for the weekly to turn up before adding. |
Falling | Rising | A bounce inside a downtrend. Often a trap. Not yet. |
Falling | Falling | No. However cheap it looks. |
The monthly is the one that matters most. It filters out the noise and stops you buying every bounce. The weekly then helps you avoid buying at the end of a short-term run. Both are lagging. You will never buy the exact bottom, and you don't need to. I'd rather give up the first 10% of a recovery than catch a falling knife on the way down.
So what do the charts say about Burry's trade right now?
I ran the numbers on the ETFs in the Benzinga article and on Burry's two short targets, using prices to 19 October 2026. "Rising" means the MACD line is higher than at the previous month-end or week-end. October's monthly bar is still forming, so it can change before 31 October.
ETF / index | Monthly MACD | Weekly MACD | Price change in 2026 so far | My read |
|---|---|---|---|---|
KraneShares CSI China Internet (KWEB) | Falling (below zero) | Just ticked up | -28.7% | Bounce inside a downtrend. Not yet. |
iShares MSCI China (MCHI) | Falling | Falling | -14.8% | No. |
Invesco China Technology (CQQQ) | Falling | Falling | -21.2% | No. |
Hang Seng Index | Falling | Falling | -5.6% | No. |
Nasdaq-100 (QQQ) | Flattening, still above signal | Falling | +17.3% | Momentum fading, but no confirmed downtrend. |
VanEck Semiconductor (SMH) | Flattening, still above signal | Falling | +52.3% | Same: losing pace, not yet turned. |
Source: Yahoo Finance prices to 19 October 2026 (Hang Seng to 16 October); MACD (12,26,9) calculated by Campaign for a Million. Price changes exclude dividends for distributing funds. Past performance is not a reliable indicator of future results.
So the honest answer is: neither side of Burry's trade has been confirmed by the trend yet. China may well be cheap. But cheap things can get cheaper, as anyone who bought Chinese internet shares in 2021 knows. KWEB fell about 80% from its February 2021 peak to its October 2022 low. A value case without a rising monthly MACD is a hope, not a signal.
On the Nasdaq side, momentum is clearly slowing, and Burry may yet be proved right. But a slowing trend is not a falling one. Shorting a market that is still making new highs has ruined plenty of clever people.
What would change my mind on China? The monthly MACD on KWEB or MCHI turning up, and the weekly confirming it. That's the moment the process says the market agrees with the value case. Until then, I'm happy to be late.
If you're a UK investor, three practical points
1. You often can't buy the US-listed ETFs. KWEB, MCHI and CQQQ are listed in New York. Most UK platforms won't let private investors buy US-domiciled ETFs because they don't publish the key information document UK rules require. Look for UCITS versions listed in London instead. KraneShares, for example, lists a UCITS version of its China Internet ETF on the London Stock Exchange.
2. An ETF is not Burry's portfolio. Burry avoided Alibaba. KWEB holds it. A broad China fund also holds banks and other businesses he hasn't mentioned. If you buy the ETF, you're buying the index, not his stock picks.
3. China has risks that don't show up on a chart. Government intervention, US-China trade tensions, audit and listing rules, and weak consumer spending have all hit Chinese shares in recent years. Keep any single-country position to a size you could watch halve without selling in a panic.
How we do it on the Great Investments Programme
On the Great Investments Programme, ETFs and individual shares go through different filters.
For a country or sector ETF, the question is the trend: monthly MACD rising, weekly MACD rising for timing.
For individual shares, the work starts with the business. We screen thousands of companies for value, growth and income, cash return on capital invested (CROCI) and the Sortino ratio, which measures return against downside risk. Only then do we look at the chart for timing. You can read how that works in the five-metric framework professional investors use.
For the whole portfolio, I have a written crash rule I call the Daddy Bear. When short- and medium-term averages fall across the S&P 500 and its biggest companies while interest rates are rising, as in 2022, I move to cash. That rule is decided before the fall, not during it.
That's the difference between following a famous investor and having your own process. Burry's trade may work. But if you don't know why you own something, you won't know when to sell it.
You can see the live picks we've actually given clients (not backtests) at shares.alpeshpatel.com.
Frequently asked questions
Is Michael Burry buying Chinese stocks?
According to reports of his Substack posts in October 2026, Burry has added to BYD and holds JD.com, Tencent, Meituan and Haidilao, describing Hong Kong stocks as undervalued. He has avoided Alibaba.
Is Michael Burry shorting the Nasdaq?
Yes. In October 2026 he said almost his entire short position was in put options on the Nasdaq-100, expiring April 2027, and on the VanEck Semiconductor ETF (SMH), expiring June 2027.
What is a monthly MACD signal?
It's the MACD indicator calculated on month-end prices. Because each bar covers a whole month, it reacts slowly and filters out short-term noise. A rising monthly MACD suggests the longer-term trend is improving.
Why use both monthly and weekly MACD?
The monthly tells you the direction of the trend. The weekly helps with timing within that trend. Waiting for both to rise means you buy later than the bottom, but you avoid many false starts.
Can UK investors buy China ETFs?
Yes, through UCITS ETFs listed in London or Europe. Many US-listed ETFs aren't available to UK private investors on mainstream platforms.
Is MACD a reliable way to time the market?
No indicator is reliable on its own, and MACD lags by design. I use it as one part of a written process, alongside fundamentals and a crash rule, not as a crystal ball.
Want a process instead of someone else's tips?
Book a call with my team. We'll look at what you hold, how you decide what to buy and when, and whether the Great Investments Programme makes sense for you.
Sources
Benzinga (2026). Michael Burry Buys China Stocks While Shorting Nasdaq: These ETFs Capture His Bet. 14 October 2026.
Yahoo Finance (2026). Michael Burry Shifts Bearish Bets To Nasdaq, Semiconductor ETF Puts. 12 October 2026.
Business Insider (2026). Michael Burry Unpacks His Evolving Bet Against the Market's AI Trade. 13 October 2026.
KraneShares. KraneShares lists KWEB China Internet UCITS ETF in Europe.
Price data: Yahoo Finance, to 19 October 2026. MACD calculations by Campaign for a Million.
Important: This article is for education only and is not personal financial advice or a recommendation to buy or sell any investment. Alpesh Patel Ventures Ltd provides general investment education and is not authorised by the Financial Conduct Authority to give regulated investment advice. The value of investments can go down as well as up, and you may get back less than you invest. Past performance is not a reliable indicator of future results. Overseas and single-country investments carry additional currency and political risks. Technical indicators describe past prices and do not predict future returns.
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