Overnight the HSBC Flash China Manufacturing Purchasing Managers' Index hits 18 month high. The survey indicates high demand for manufacturing domestically as well as internationally.

The HSBC Flash China Manufacturing Purchasing Managers' Index jumped 2.7 points to 52 for the month of July compared to June's reading of 50.7.

Remember a reading of 50 and above is consider an expanding economy and below 50 is consider contracting.

Qu Hongbin, chief economist for China at HSBC highlighted in the report that not only did new export orders along with new orders (domestic) expanded at faster rate compared to June but employment improved as well during the same period.

Mr. Hongbin as went on to say the "Economic activity continued to get better in July, suggesting the cumulative impact of mini stimulus measures introduced earlier are still filtering through" and "We expect policymakers to maintain their accommodative stance over the next few months to consolidate the recovery."

We have been bullish on China (FXI, quote) and the emerging market space (EEM, quote) for some time now and our conviction is reinforced on the HSBC Flash China Manufacturing Purchasing Managers' results. HSBC results are part of the stealth rally in China and be seen in the Chinese GDP which expanded from 7.4% to 7.5% in Q2.

Be sure to check back after the market opens as we look put back some of the profit to last week back to work in the emerging market space.