Last week, China ADRs (as represented by the Bank of New York Mellon China Select ADR Index) broke out in impressive fashion to a 6-year high, scoring their biggest weekly gain in 3 years.

Though resistance still lies above from the blowoff top in 2007 (the 61.8% Fibonacci Retracement is roughly 5% above the level of the index now), this breakout may be for real for one reason in particular. In our June 20 Chart Of The Day post, we noted that the Shanghai Composite was mired in its 2nd lowest volatility period ever.

As we suggested in the post, from low-volatility extremes come big moves. Indeed the Shanghai Composite, like the Chinese ADRs, began an explosive move to the upside last week. Given the subdued action in Chinese stocks for the last several years, this move may have some staying power.