Monday, February 4, 2008

China Small Cap Speculation is Back

Posted by TraderMark at 1:26 PM TweetThis
Ahh, it has been many moons since our old friends showed any life. All it takes is a week or two of market bounce and we go back to our old haunts...

I think Cramer started it this time with his bullish call on Gushan Energy (GU) - never heard of it! But it opened the floodgates to Chinese small cap speculation. Ah, the spirit is in the air.

China Precision Steel (CPSL) +22.1%
China Natural Resources (CHNR) +22.1%
Gushan Energy (GU) +16.9%
China Architectural Engineering (RCH) +14.6%
China Direct (CDS) +12.8%
China Finance Online (JRJC) +12.8%

A pretty quiet day for these guys... when they really move, the (ahem) investors in them can push them up 40-60% in 1 day.

So for those of you new to the blog, not that I'd ever do this but what worked day after day all October was to buy the 5 highest returning chinese no name stocks who were up the most, and the very next day the basket would be up 30%. Sadly this worked for about 4 weeks straight. ;)

And we try to pretend this is any different from Las Vegas... eh?

Posted by TraderMark at 1:26 PM Comments (3) | Edit This Post | Create A New Post

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3 comments:

cm202bc said...

Mark, this pertains to your first post of the week, but I didn't want it to be buried by the volume of posts.

Expecting another downturn and poor performance by the consumer, I was wondering if you had any thoughts on SCC, the ultrashort consumer services ticker. Kind of surprised to not see you mention it given your view on consumer debt. Makes me wonder if there is a negative apsect to it that I'm missing.

February 4, 2008 4:48 PM  
TraderMark said...

Hi,

I actually think the easy money has been made in financials, retailers, restaurants and home builders. I still think commercial real estate has a ways to go since people still think its immune.

With that said, these sectors have risen so much so quickly they are probably good for a trade now back down.

Specific to SCC, it's biggest component is Walmart which is a company I actually think will do fine in a recessionary environment and its 2nd biggest is McDonald's which I also say the same thing. That said, those 2 are about 12% of the index so that leaves 88%. It is something to consider but I'd rather see it populated by stocks like Sears, JCPenney, Nordstrom and the like. It is not a bad option though but I already have a bevy of short ETFs. I would of much rather been able to short an individual name like say a Coach or Harley Davidson back last fall; would of been much more effective than the ETF.

February 4, 2008 5:47 PM  
cm202bc said...

ah, I only saw the components not the weight. It has certainly outperformed most of the short indexes to this point, but I'll have to look at it more closely. bien gracias

February 4, 2008 11:04 PM  

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