To OTC Journal Members: 
 

EmergingChinaStocks.com Update

Well, it's live, and we have a bunch of subscribers for this new service. Thanks so much to early adopters. The systems for both enrollment and email distribution are all new to us, so give us a week or so to work it all out.

For starters- I published the first "Flash Alert" on Monday morning. If you signed up and didn't receive it by email, let us know right away. You can email me directly at editor@otcjournal.com if you didn't get it. It's probably an email related issue. Also- we had a problem with non US subscribers. I was excited to learn we were getting participation from Belgium, Australia, and even Iceland. However, none of you folks were able to enroll.

We have fixed the problem. If you are not enrolled, please try again. The non toll free number for overseas users is 702-448-6541. You can call that number for help, or reach out to me directly using one of the email address. We still aren't able to accept American Express, but will be able to shortly.

Thanks so much for participating.
 

The China Surprise

The Chinese government, under extreme pressure of late to start the process of devaluing their currency, surprised the world last night by raising interest rates. One year deposit and interest rates were raised by 25 basis points to 2.5% for deposits, and 5.56% for lending.

The Chinese government has come under pressure of late to devalue the RMB, and so far the move is still "under discussion". However, today's surprise move did have the effect of strengthening the dollar.

The move in China is a very interesting on several fronts. Despite knee jerk overnight huge volume sell off in Shanghai, it says the Chinese believe their economy needs cooling off- especially the residential real estate sector.

The Chinese, who appear to be very willing to learn from our mistakes, are cutting any sort of potential real estate bubble off at the knees. In my first weekly edition for emergingchinastocks.com, I'm going to be covering exactly how the Chinese are slamming the lid on any sort of bubble potential.

In conjunction with the dollar's strength today, the commodity sector is getting hit hard. Short the dollar and long commodities- the big "trade", is unwinding a little today. Gold, oil, ag products, copper, etc- all taking a good old fashioned beat down today. The dollar is stronger.

The China stocks are down on the day across the board. However, I'm relatively certain this will be short lived- especially in certain sectors. I'll be taking my cue from the Shanghai index which fell below 3,000 overnight.

Chinese investors don't have a lot of options. Residential real estate has been a darling investment in China, but the government is telling it's wealthiest to forget property. The government doesn't want to see a US style bubble, and wants residential real estate to stay affordable for the Largest Emerging Consumer Class in the history of the world. That leaves stocks and gold for Chinese investors.

Some to the streaking stocks I've suggested of late are retreating a bit today. The commodity related stocks we are tracking at emergingchinastocks.com are all down moderately, which is fine with me for a day or two. I've loaded the boat with these stocks into earnings which will be highly concentrated between Nov 1 and Nov 15. I'm glad some of them are cooling off. If they had kept streaking, I might have been tempted to take some profits. I'd rather hold them all right into the numbers. 

Which brings me to the hottest of the bunch- ChinaMediaExpress (CCME). The stock went up for 9 consecutive trading days, and was entitled to come back a bit. The shorts are likely breathing a sigh of relief. The short interest in many of these China companies measures millions of shares, and those shorts will provide the bid on pullback days. They are all tipping their hats to the Chinese government today for bailing them out when the stocks were looking like they could go parabolic.

I had not planned on providing any more thoughts on CCME through the OTC Journal- I was going to move all the content over to the new publication. I'll share one last note on this stock. The pullback in the last couple of days is heaven sent if you're not in the stock. It gives you an opportunity to get in at a reasonable price before next month's earnings release.

I'd look at the first retracement level of 38.2% at about $13.75, and be prepared for it to drop as low as perhaps $11.75. This range would be ideal to own this stock into their earnings release.

If you're not a subscriber to the new publication and want to learn the measures the Chinese are taking to cool off their real estate market, sign up between now and the weekend. You can enroll, risk free for six months, at www.emergingchinastocks.com. I'm planning a second flash alert tomorrow.

One of the hottest stocks featured on the site is an idea I found- it's like owning China's version of Disney in 1960 in front of 40 years of big growth. This stock is up 25% in the last 8 trading days. 

Also- I'm studying another rather illiquid and under followed China stock. My last idea of this type- China Electronic Holdings (OTC BB: CEHD), is up from $3.15 to $4.15 in two weeks- that's 32% in the last 2 weeks.

I've got another one just like it. Instead of appliances, this company is furnishing homes all over China. Stand by. 

Disclosure: Long CCME and CCME Call Options and about everything else at www.emergingchinastocks.com. 

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