We want to ALERT our readers to the fact that the Shanghai Index is hovering around its 52 week low. For aggressive traders we recommend shorting FXI (an ETF) and BIDU at current levels ($142.00 and $282.00 respectively as of 4/2/08).
We will not be buying any Chinese equities at present. Since China does not allow short selling, we urge you to monitor this market over the next several days and bear in mind, the Beijing Olympics loom. For all new Psychology of the Call readers unaware of the Eleven Commandments of Trading, we want to remind you that it's VERY important to put in place the mechanisms that will prevent anything other than minimal loss of capital. Our failure target on FXI is $158.00 and $304 on BIDU, so MAKE SURE to use "buy stop orders" in both cases that would limit the loss in FXI at 11%, and 8% in BIDU. (Commandment #3 requires you to cut losses at a 15% maximum, but our analysis of underlying factors suggests 11% and 8% for FXI and BIDU respectively).
8 comments:
Short fxi makes sense, bidu i would be afraid to short, we will see how the calls turn out ..
I don't think Chinese Shanghai will fall to year low. I am born in Shanghai but live in large US city. Do you have a list of the favorite stocks, thank you.
Our goal is to tread safely, not just throw out a list of stocks without knowing your financial situation and goals. The 11 Commandments are our foundation. We recommend every investor have a margin account in order to short as well. We'll be going to an Internet portal next week and we'll offer trades only when we see high probability set ups. Thanks for the question.
shorted bidu at 284.65 and fxi above 144, had to call ameritrade to help with the "buy stop" orders though, never made such a complicated trade!! oh, will you give us updates ? thnks
We enjoy your blog, why aren't you listed on ANY financial blog data base? We think you should look into that
1)We'll update FXI & BIDU as price and market conditions dictate.
2)We don't come up on a financial blog search because we believe more in natural market forces than certain advertising forms. Please be aware that our official web site/financial portal is about to launch.
VERY interesting trading strategy, i shorted FXI on your suggestion at 147, hope your analysis of the Chinese mkt and Olympics turns out to be right!
You called it a month back, congratulations and good luck with jrjc, fxi, and bidu, i shorted bidu at $294 Friday.
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