China is Going to Hell in a Hand Basket

When China Mobile Ltd. (ADR) [[CHL]] was in the 70’s and I told you it would have a 5 handle soon, you all laughed at me, while eating greasy smoked ribs. When I said China Life Insurance Company Ltd. (ADR) [[LFC]] is a “whore of an equity,” you all chomped corn cobs, like freakin’ beavers eating through wood.

Much to my naysayers chagrin, [[FXP]] is going to print $100 soon, thanks to overwhelming weakness in Chinese H shares. With the Chinese stock market in the dumps, I love the prospects for [[EEV]] and FXP.

Also, remember, FXP gets you short PetroChina Company Limited (ADR) [[PTR]] , China Petroleum & Chemical Corp. (ADR) [[SNP]] and CNOOC Limited (ADR) [[CEO]] too. It has something for everyone.

Look for crude to bounce here. Right away, start plugging away at the refiners. Again, I like Western Refining, Inc. [[WNR]] , Valero Energy Corporation [[VLO]] , Frontier Oil Corporation [[FTO]] and Tesoro Corporation [[TSO]] .

As for the basic material space, it is going to bounce with great fury soon. However, for a hedge, I like VeraSun Energy Corporation [[VSE]] and Clean Energy Fuels Corp. [[CLNE]] here. I am long both.

Courtesy of “The PPT,” here is a small list of basic material names, sorted by large percentage of shares sold short:

Encore Wire Corporation [[WIRE]] : 30.7%

Western Refining, Inc. [[WNR]] : 29.9%

Hecla Mining Company [[HL]] : 27.5%

Trico Marine Services Inc [[TRMA]] : 27.4%

USEC Inc. [[USU]] : 25.4%

RTI International Metals, Inc. [[RTI]] : 24.5%

[[GGC]] : 24.1%

McMoRan Exploration Co. [[MMR]] : 22.9%

Apex Silver Mines Limited [[SIL]] : 22.1%

Flotek Industries, Inc. [[FTK]] : 21.4%

Allis-Chalmers Energy Inc. [[ALY]] : 21%

Insteel Industries, Inc. [[IIIN]] : 20.7%

Metalico, Inc. [[MEA]] : 20%

Goodrich Petroleum Corporation [[GDP]] : 19.8%

Tesoro Corporation [[TSO]] : 19.8%

CARBO Ceramics Inc. [[CRR]] : 19.2%

Dynamic Materials Corporation [[BOOM]] : 18.9%

VeraSun Energy Corporation [[VSE]] : 18.7%

As you know, I am not a big fan of technical analysis. However, I am a huge believer in monitoring price action. The way a stock behaves tells a story. I don’t believe in all of the mumbo-jumbo formations that may or mat not indicate a “break out.” However, I do believe there is something to be said about a stock hitting a 52 week high on a daily basis or a stock up big, on monster volume.

That is why I have put iBC’s IT department to work, in slave-like fashion, to develop The PPT.

I will explain what it can do, in detail, the closer we get to launch (October 28th). Just know, it will monitor the price action of every stock publicly traded, using the parameters I deem important. And, as an aside, we will give the user the power to set his own parameters too.

NOTE: Legg Mason, Inc. [[LM]] caught a downgrade this morning by Credit Suisse, mainly because Bill Miller sucks.

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