Investment Capitalist

There’s a lot of play here right now, and this group has consistently been on the top of my performance list. They’re a wild bunch and you have to try and trade against the herd, otherwise there’s no liquidity and you’ll get picked off like an ugly zit. The theme is really revving up and the stage is being set for China to fill the U.S.’s shoes as consumer kings. Except China consumes raw materials and exports finished goods to the U.S. And since all the stimulus has been supply side Keynesian Dogma, it’s quite apropos that we’re seeing a surging supply side recovery underway.

Fact: China has already exceeded the amount of copper and zinc it imported in all of 2008.

That doesn’t mean run out and buy BIDU. In fact, I use BIDU to hedge overnight beta risk against my growing list of Chinese stocks. Again, liquidity is a rarity and any sudden stupid moves and you create a spurt of algo chaos. These algo’s control most of the liquidity during the day, except for the first and last 45 minutes. If you trade like a monkey and spray the bid and ask, you’re going to get filled like a monkey would trading with a blindfold on.

The Chinese stocks covered in last week’s post have all shot up significantly on a % basis. This is only the beginning. Remember, these are stocks that overshot the downside as much as they had overshot the upside last year. Trade the tape and make a market in the names you hold core positions.