July-19 Short term play - Chinese metal stocks

By inspecting Chinese metal sector, you will find they are at the level of long-term oversold and mid-term consolidation around low level, thus these stocks are heading for short-term rebound.

 

Taking 601600 for example, this stock is trading at 14.2 RMB, and this stock is heading to 17-18 RMB area in the short term.

 

Other stocks to watch, for A share market:

601600, 600497, 600489, 601899, 600362

 

for H share market:

0358, 2600, 2626, 1208

 

Please note: I am more confident on A share metal stocks.

 

July 9 Daily update

Given the condition that financials waked up. The market is due for rebound very soon.

Buy good stocks to hold, now it's time. Chinese stocks are good ones to have. Do remember this country still has 10% GDP increase in the first half and most major banks doubled profits in the first half compare to 2007. I recommend ICBC HK:1398 and most other Chinese bluechips.

A share and H share are targeting decent rebound in mid-term.

ETFs for clean energy and technologies such as PZD and PBW are worthwhile to watch.

Please pay attention to the market. This area is quite likely to be the big bottom, if a decent rebound is established.

July 8 Market comment

Vietnam rebounded 20% in past weeks. I believe A share will also do this.

Crisis is always a reason to stay on the short side, while it is also the best opportunity to start long position.

Long CAF, China bluechips and ETFs such as 150001.

In US, I find chocolate producers are good ones to have.

Jun-27 Market Comments

Some people are wrong this time, including me. I thought 12000 could be the bottom and the market should go up. Given the rate steady decision, I think the market should also be able to recover a bit. But I was wrong on that.

However, I was correct on buying zone for stocks like RIO (33-34) and AAPL (155-165), I think it is time to load good stocks again. Split your position into three steps, buy at any point below current level, and 11000, and 10700, if DOW reaches that point, which is not likely.

For risky-free players, I suggest to buy maybe three to five weeks later, you need to both have commodity, tech, airline, and financial stocks this time for your long term positions. Including ACH and ZNH, they may keep silent for years but if you catch one wave, then it's enough.

For A shares and Hong Kong market, I recommend Chinese banks, ICBC is now my recommendation both on A and H. Steel makers are good ones to have as well. Finally, I think Singapore Airline is good to have as well. I plan to add it to my retirement account weeks later.

Jun-16 Market updates

Given the market sentiment and recent environment. The market should turn to bullish soon.

It is possible to touch 12000 but I guess there won't be new lows. Today I would like to talk more on AAPL and its iPhone 3G.

I believe major stocks such as AAPL will still lead the sector, as I am optimistic on its 3G phone. Like iPod, the first release was not very impressive as mostly Mac fans were buying. However, with release of 3G iPhone, I think many actual users will buy it, including many young business man born after 70s. It provides GPS with Google map, therefore I think it is more powerful and informative than other GPS providers. Other functionalities of this mobile device are also more fancy and user-friendly compare its rivals. One of the most important thing: it is cheaper than previous iPhone. 200 USD will bring this mobile phone to a normal consumer electronics rather than a fancy luxury goods.

I think AAPL is a buy in the area of 155-165 with one year scope.

Jun-14 Current Opportunities

There are many opportunities out there so I think I need to write something, although I am still not fully settled yet.

 

First, if everyone sees there is a crisis in Vietnam, I see a great chance for long term investment entries. Just search Vietnam funds, than you will find many. Just look back the financial crisis during 90s in Asia and how the stock goes in the next couple of years. People always are fearful when crisis comes, while you can fine a lot of stocks that are ridiculously cheap.

 

Second, metal mining is next wave of inflation after crude oil. I personally think the oil bubble is going to explode quite soon. I strongly doubt if crude oil can go beyond 150. Just check airline stocks, do you really believe so many big airliners are going to bankrupt? I think it is good time to buy metal stocks, such as AA FCX RIO CLF and others.

 

Russian stocks are still good buy here.

 

The overall market in a second round of testing bottom, let's see if 12000 holds. If so, we should never see new lows. Another 1-2 days while candlestick can prove that.

May-29 Up or Down?

I believe on FA side, the stock market should not go down significantly. GDP tells us something but not everything. But at least US is growing at 0.9%, not in a recession anyway. My theory tells me the DOW should be staying above 13000 to price in the economy without recession. On the housing price, there is a recent hot topic in Asian magazines for wealthy people, both eastern and western Asian, regarding bottom fishing the US housing market. Although I am not really sure where will be the bottom of the housing price in US, I guess it won't be too far away, maybe around late this year if it comes earlier.

I am not able to cover the market everyday in next 2 months until August or even later, as I need to settle down my personal stuff. I think I will update when I can, maybe twice a week or a bit more. I think in general, a steady long position for long term buy and hold is highly recommended. I still expect you can earn more with good picks in your long term positions compare to bonds or savings.

May-28 Back for a moment

Just got off the plane and had the dinner home, however, I will travel again with limited internet until 7th June.

Let me first breifly recap the market of previous 6 tradings days I missed. Apparently that was a major correction after break the resistent around 12950 area. My stop loss call on 12950 may shed your loss a little bit. Given most tech and commodity stocks have been flying for a while, this round of correction was not sudden, plus the continued weakness from finance sector. High oil price is an execuse for correction, as always.

For the next weeks, I believe the market will again turn to finance. Dow components AIG and BAC have been dumped greatly and I guess there would be two possibilities in the near future. One will be a decent sell-off comes and leads DOW to 12000. This is very bad situation as most people, either on main street or wall street, don't want to see this. Another possibility would be the rebounce of financial stocks bring DOW back to 13000 area to test previous high and continue a bullish trend. Of course people would like more to see this but we still need to inspect several days.

Trading strategy would be quite conservative. A combination of tech and commodity with your half position in long is OK for now. Be careful if you have short position on financial stocks. Retailers have touched the bottom as I expected months ago. I assume your hedging position on gold longs are quite profitable now.

May-14 Next Target

Simple and straightforward comments: if you get in around low 127xx, you are happy now. If you follow some people to play short, I am sorry about that.

Next target would be previous high near 13200, if DOW could hit 13200 and then holds above it, we see 13400 area as next strong resistance in 135xx area.

Still, you have chance in Asian markets at this moment. Forget about Tech now, you don't have much mean left when RIMM hits all time high and AAPL on its way. Normally, stocks are cyclic business and every dog has its day. Now I think it's better to check good stocks with sound FA. True, you may easily earn 30% on a stock but you may end up with 50% head cut - I have been heard similar stories innumerous times since previous downturn.

I'll try to find some good stocks to add to my pick list in next few days.

May-12 Market Update

Sorry for a bit late update today due to several personal issue.

If you followed my suggestion of buying around 12700 supporting area, your position should be profitable now. Next step is quite important: Let's see if DOW could close and hold above 13060, which determines the near term direction. A breakout will lead DOW to test 13300-13400 area, but an M head will bring DOW back to 12500 or even lower. Please track closely if you play swing.

Let's eye on the impact of the earthquake in China, while I hope it won't effect much on stocks outside Sichuan and Chongqing. I am still long on Asian sector. Regarding individual stocks, I am sorry I can't reply all of your emails, here I paste ones at least act in normal manners (NOT absolutely manupilated) with good fundamentals in my watch list. Please note, I am not taking this list into my pick list due to extreme volitality.

AOB COGO CTRP EDU GA JRJC PWRD SNDA SINA SOHU WX

With nice return, please also be prepared to lost 2/3 or even more of your investment if you buy these stocks.

May-9 Need to be careful

Several days ago I predicted the correction to 12700 area and now it's almost here due to AIG earning report. My strategy is quite simple:

• Load stocks you like from 12700-12600
• I see a strong support on 12550-12650
  
• Cut your loss when DOW dips below 12500

This strategy allows you load at downside risk of 1.5% on index and around 5% on individual stocks. If the stocks are hit hard this time, I guess government may again try to save the market.

May-6 Daily Market View

If DOW could hold 12700 area, then this small correction will over and I would expect buying zone would be 12650-12750 with stop loss 12500. Following sectors and stocks could be your targets:

• H-Share ADRs, CAF
  
• Indian ETFs
• Brazilian resource stocks
• Tech and transportation

For candidates for short and put as hedging purpose, consider bond insurers and financial stocks. In current market, any short position will be highly risky. Volatility will be quite limited.

May-05 A correction may come

Given several technical indicators such as CCI, MACD, BBands and other indicators such as VIX and Put/Call ratio, I bet on there will be a correction on recently market. This correction won't be very decent and my target is 12600-12700 level, around 300-400 decline from current level. This reflects my reduce call on DOW falling below 13000 again. Just now DOW is 12989 so I think if during this afternoon there is no evidence showing the market strength, you may reduce your long position in general.

However, individual stocks may vary from sector to sector, for example, commodity sector may rebound to steady back from previous decline.

May-2 13200 is here

I was told that I was a moron and crazy idealist when I said this rebound will actually go to 13200 around end of January. Now it's here. What should we do now? My strategies are different based on your positions.

• If you 100% long, on every 100 advance of DOW above 13000, reduce 10% of your position until 13500. Then use 13500 as your stop win point for the rest, otherwise, 13000 is your stop point.
  
• If you 50% long, one every 100 advance of DOW above 13200, reduce 10% of your position until 13500. Then use 13500 as your stop win point for the rest, otherwise, 13000 is your stop point.
• If you are empty, buy 30% of your position on Asian stocks and ETFs when you still can, use 5% stop loss if you have good entry price during weekly lows.

Please, do not consider to win on both sides, long and short, this might be too difficult for many people. Frankly speaking, I find it difficult to both long and short stocks, rather I will trade Forex or Gold instead to hedge my stock position. This is not recommend for most beginners.

BTW, I hope you enjoy the ride on ZNH, which surged 9% last night in Hong Kong.

May-1 Sentiment still bullish

I cannot say anything until today. The sentiment is still bullish as many big guys said the worst is over. However, I still think the economy is not that good in US, so I continue to bet on emerging markets.

In the next days, we see non farm payroll data coming. As DOW topped 13000 yesterday, I think it won't be the last time we see 13000 during this period. Next try of 13000 is critical and necessary. A fail on holding above 13000 will cause major correction to 12600 area. This is my personal opinion.

Currently, I think only Asian markets are safe.

Apr-30 Brazil ALL TIME HIGH!

I apologize as I can't help myself for not BSO this time about Brazilian sector. After S&P upgraded Brazil investment rating just about an hour ago, the equity market of this country surged to all time high. I am so exciting as there are so many stocks in my pick list are Brazilian stocks and I just recommended EWZ on MSN group 2 days ago, also, there have been numerous times of recommendation on this mailing list and blog as well. Just check the great names below: ARA, CPL, PBR, RIO, SID. I hope you've bought some Brazilian stocks in your portfolio, if not, no worry, any future dips will be good opportunities and I would expect correction is coming next week. :)

Apr-30 FOMC Strategy Today

I guess many of you are expect this message, but I cannot say anything until now.

There have been 100 points spike for DOW today, so now my strategy would be keeping 1/3-1/2 of your long position, or adding hedging position to you account because of reasons below:

• After FOMC, it is VERY possible to hit 13000, even 13100, then sell-off comes, or otherwise, it holds above 13000. If 13000 holds until 3:45, huge number of buyers will step into around the last 15 minutes, you can also be one of them. Hong Kong, Indian stocks can be your targets.
• It is also very possible to hit below 12800, so buy something to wait for an immediate rebound to sell it if you can do DT. If you see indices come back later, you can also buy back H-share ADRs after 3:45, otherwise, just let it be.
• 13600 is critical support for this uptrend, reduce another 1/4 if this is broken in next days.

To me, I still tend to be bullish in the next 1-2 months, while we need to be prepared for all circumstances. If you are comfortable with your current long position which is not heavy, just sit back and relax. Most time, do nothing is the best strategy.

Apr-24 Struggling?

I think many of you are struggle on whether to sell CAF now as we have around 30% again now based on pre-market. For stock like CAF, you know have ER to spike, so I think it is always better to hold for a decided target and wait for another chance. Nobody knows how A share market will act tomorrow, but most people believes the rebound will be over 4000. To my personal opinion, a gap-filling is possible in next week but I hold for target 4800 for Shanghai Index. The reason is simple, the gvmt wants the stock to rise before Olympics to show the strength of Chinese economy. 3000 is confirmed bottom, for those still are out of the boat, jump in when Shanghai fills the today's gap. However, feel free to take some profit off the table if you are heavily loaded.

For Hong Kong market, I just like the way it rises little but H shares spike with A share. Indeed, H shares with quite low PE which does not look like an emerging market. Be steady, watch stocks that didn't spike yet, such as CHU, CN, CHA for the next round.

Apr-23 Chine stocks fly

Glad to see all H shares fly! I mentioned PTR and LFC around morning the day before yesterday, and you have seen the short term big swing up, as several rounds of good news.

CAF also shines. The reason I initiated my coverage of this company as I supposed CAF will not drop further because it is not an ETF, it is a US company that invests A share market. There is no surprise that Morgan Stanley is one of the first big sharks getting out of the market at peak around 6200. I also believe they have been accumulating shares since Shanghai Index dropped below 4000. That's why it did not drop much with A share market but follows US market instead, but now I think they can be influenced by this A share rebound, given many actions from gvmt to save the market.

Apr-21 Earnings

BAC reports an ugly ER but price does not dip much. The overall market seeks a correction to 12650-12700 area, let's see if this level can be hold.

More interestingly, we have a lot of other earnings coming around. Let see some of them for today and tomorrow morning.

For today, TXN report might be positive. For tomorrow, MCD and DD would be positive as well. T might be somehow negative. This is quite FA based. If today closes red, the post-ER action would be somehow normal, which is, if it beats, the share will go up, otherwise, go down.

By the way, PTR is in good shape, as well as LFC.