MOMENTUM-CHINA $$

China sure spells m.om.e.n.t.u.m these days. IPOs are being rewarded unbelievably. Case in point- STV. the CHINA Digital TV company listed on the NYSE Monday. IPO price was a mere $16 -it closed at 28 or so on its debut. Next day soared to 40. Where is it heading? With BIDU at all time highs- following the GOOGLE path... looks like this ones in the right country- The stock price has got a run rate of 12 bucks a day. So lets say, back of the envelope calculation for STV gives me 52 tomorrow (I should say today- as its 2 a.m. Oct 8) and then 64 the day after? When does one sell? Just before the momentum is over and out. How do you know that. You almost never know when- so you usually get burnt. Unless you start selling at the first sign of a fall- not a pullback.


The jist of it is theres loads of money to be made in the chinese stocks. I watched CHNR - China Natural Resources- move from 10 to 50 in a week- and I knew this ones going to get busted, momentum or no momentum. Shorted at 47 on monday (see mondays blog) Covered at 35 in a day. Like I said theres loads of money to be made either way on these chinese stocks, as long as you get in and out at the right time... TIMING is everything. I would not be caught long in my short position though I think it could go back to the 20s before we know it.

I would certainly not recommend playing such hi-fliers on the long side unless you hedge your position by buying put options somewhere down the line... but most of these new companies will not offer you that as yet. So watching helps. Trading in and out while the momentum is on can be a winning strategy as long as the stock continues going up.

Its just another madness in the market that I am sounding an alert on- momentum is madness... and it certainly moves a stock fast...and traders who follow the price movement of a stock actually buy stocks that have risen a lot in price... that adds to the momentum and the stock can go still higher.

These days I am getting a sense that the market is overbought. Theres the earnings comin up this week- ALCOA being the first one tomorrow... and still theres been no pullback or fear. I am happy with cash though its tempting to get pulled into the momentum.

FINANCIALS- Lehman looks good to me. Its settled down around 62- may not be a bad idea to buy some- for long term... can easily pull off 70 - with not much risk on the downside.

AKAM- is finally moving up- was a dead stock at 30 beaten down- from a high of almost $60... its the internet media delivery leader...crushed due to competition fears- is finally moving up= 34 today. If the momentum returns to this one- mid 40s is not far away.... Theres analysts who say sell and analysts who say buy. I am in this one at 30 and will stay with it till it reaches 40 this month... wish I could be more humble. To sway the fear of competition lets buy the newbie - LLNW= Limelight networks trading at 10 or so. So one way or the other we make money- got to love the sector- delivering video- graphics-music... includes Apples ITUNES... whats not to like.

Theres nervousness out there.... would stay away from everything other than beaten down stocks... that have shown life... cuz they are the ones that will continue rising... when the hi-fliers start to correct.

Correct or wrong... we shall see... high anziety- spells more rallies- watch out for every bear to get bullish... takin the market to new heights. We shall watch and stand by to applause that move- and be all cash - will let you know one of these days, says Mona, thats me.