The buying interest in FXP has been strong in the past 2 weeks. What is this telling you? For one, the Olympics is near. At this time, there will be a lot of waves in China-related stocks for the next few weeks, therefore I’m packing my stuff and heading for China to catch some waves! For now, I am leaving the Ag plays because POT should consolidate here around 180. If you’re a swing trader, get ready to ride the volatility in China stocks!
How does an event like the Olympics affect the investing community? Probably the most important thing is EXPOSURE. A lot of people have been playing the China-lotto, investing blindly in Chinese stocks, not knowing what on Earth that company does. ( I knew someone who was crazy about a “Chinese Biotech” company that in reality, sold fertilizer, or a “Chinese mobile company” that sold batteries. What the? This is plain old greedy trickery, and I advise you to be careful when you buy those micro-cap Chinese stocks that no one has heard about. ) Well, now with the Olympics in China, the world will get a sneak peak into an effectively hidden country. Investors will get to gauge what China really looks like, and estimate the potential of China’s growth. If you study Chinese history and culture, you will find that that country is very self-contained, almost the exact opposite of America. However, with the Olympics, China will be forced to finally show their cards.
Here’s a list of Chinese stocks on my watch-list:
Better Volume
[[FXI]]
China Mobile Ltd. (ADR) [[CHL]]
[[FXP]]
Aluminum Corp. of China Limited (ADR) [[ACH]]
New Oriental Education & Tech. Group Inc [[EDU]]
Focus Media Holding Limited (ADR) [[fmcn]]
Yingli Green Energy Hold. Co. Ltd. (ADR) [[yge]]
SunPower Corporation [[SPWR]]
Conservative:
China Fund Inc. (The) [[CHN]]
[[TFC]]
Movers:
CDC Corporation [[china]]
China Finance Online Co. (ADR) [[jrjc]]
China Southern Airlines Limited (ADR) [[ZNH]]
Qiao Xing Universal Telephone, Inc. [[xing]]
The9 Limited (ADR) [[ncty]]
Right now I am heavily short China with my [[FXP]] position. However, I am searching for a bounce in some beaten down Chinese stocks since we are heading toward long-term supports. If you feel the trend in China is down for the next few months, you may want to buy BOTH [[fxi]] and [[fxp]] .
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Sold my PCX swing long for 6% gain. 109.80. I’ll post this later. Bought some EDU.
i went with FNM put…
Not many interesting positions to consider with earnings…
i myself have an ultra long FXI put…. FXP is up huge, unfortunately i didnt set a stop on VISN, today would have been a nice exit… i am in fact torn tho, it may be that China will be up just for the duration of the Olympics.
“the world will get a sneak peak into an effectively hidden country…”
Dude, what decade are you living in? It’s the 21st century, not the 1950s. If I’m not mistaken, there are over million foreign nationals currently living in China.
Other than that, keep up the good work, comrade! I like your style.
Why buy both FXI and FXP if you think trend is down?
Comrade… that quote is from an economic/China-asset/infrastructure perspective. The Chinese stock market is new, and there are a lot of “hidden” economic variables because China has a relatively tight control over their markets. A-shares… B-shares … caps on prices… I think many of those “rules” will be done away with to emulate majority of the world markets. It just has to, espeicially when the Olympics puts China-the-gross-domestic-producing-king of the future in the limelight.
Buying both FXP and FXI is a conservative play if you think the market will trend DOWN. I’ve done a study on inverse-ETFs and regular ETFs and have found that you can buy both funds and come out with a gain if there is a trend. If you’re interested, I’ll post about it later.
China will succumb to the affects of rapid inflation, soon enough.
that’s why the tracking error on diETFs is in your favor if the price movement moves with the direction of the ultra. I’ve noticed this Gio, but no study, would like to see it.
Fly, China has the biggest imbalance of any market. Whoever ran this market was so stupid. Get rich investors who have no regard for the future of their country. You think China will have rapid inflation? I think they will hit a depression in a few years.
Sure Danny… actually, I know someone who runs a fund in Canada that did the study. His charts are clean. And his back-testing on the ETFs amazed me, so I had to make the study myself.
Or, if you don’t want to buy FXP and FXI at the same time, you can set a leap-strangle on FXI in 2010. Or you can buy far out calls in FXP and FXI. Eithe way, China is setting up for a huge wave.
In other words… long FXP + long FXI = net positive. That would be ideal. While, if the market moves in the other direction, then your loss is limited.