China’s Blasting Off – Are You Onboard?

The major averages are cooling off. Even the unstoppable Nasdaq is taking a late summer vacation, falling almost 4% from its all-time high set last month.

But that doesn’t mean you have to throw in the towel. After all, it’s a bull market. There’s a new mania around every corner. If you play your cards right, you could even bank overnight gains of 20% — or more. You just need to know where to look…

While the Dow and the S&P trickle lower, we’re seeing plenty of bullish action in China. The Shanghai Stock Exchange has already shaken off its early August weakness. It’s pushing back toward its all-time highs as I type.

The Shanghai’s biggest gains are coming from some unlikely characters. Chinese speculators have are capitalizing on monumental moves from tiny companies that are popping up out of nowhere.

“State-owned Luoyang Glass is the second-best performer in the Shanghai Composite so far this month, spiking 34 percent. The stock has also hit the 10 percent daily trading limit for the last three days. The Henan province-based company is rarely more than a blip for investors: Luoyang is worth $1.2 billion, a measly 0.03 percent of the Shanghai Composite’s total market cap of more than $4 trillion,” a CNBC market report notes. “The only thing is, it’s unclear why Luoyang’s stock is jumping, and even the company says it doesn’t know why.”

I love to see markets go off the rails. We get to watch investors pull their hair out as they watch these unknown stocks go limit-up almost every single day. Instead of grabbing shares and enjoying the ride, they go mad trying to figure out why a stock is moving higher instead of letting the momentum work in their favor.

That’s exactly what we’re seeing in these Chinese stocks right now – huge momentum moves producing extraordinary short-term gains. We don’t know how long this environment will last. But we can certainly look to bank short-term trading profits as these opportunities materialize.

You don’t have to move to China to join the party. Chinese tech stocks listed on major U.S. exchanges are ripe for the picking. In fact, the Chinese ADRs are stomping all over the gains of your favorite American tech names so far this year.

Forget about Facebook and Apple.  China’s tech ADRs are dominating our daily gainers list. We told you earlier this month that our trading portfolio looks like a Chinese embassy this year – and for good reason! When it comes to fast gains, these stocks have delivered.

We were able to harness a fast 50% gain in just a few weeks betting on Momo Inc. (NASDAQ:MOMO).

Alibaba (NYSE:BABA) is another solid winner from our trading portfolio. We cashed in our chips on this trade in early May for gains of 23%. The stock continues to prove all the naysayers wrong as it pushed to new all-time closing highs for the fourth day in a row.

Our list of winners continues to grow this week… Inc. (NASDAQ:WUBA), a stock many investors are calling the “Craigslist of China”, beat analyst’s earnings and revenue estimates by a dozen miles yesterday. WUBA proves that not all these rallies are based solely on hype. Some of these Chinese stocks are enjoying breakneck growth. Shares rocketed 20% Monday. That puts your open gains close to 50%.

Now that China’s beginning to boom, we have a great shot at avoiding an ugly August slump. Let’s stick to strength and grab these gains while we can…


Greg Guenthner
for The Daily Reckoning

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Greg Guenthner

Greg Guenthner, CMT, is the editor of Opening Bell Fortunes and Seven Figure Signals. He has been with Agora Financial/Seven Figure Publishing since 2005. In 2019, the average position in Greg’s Sunrise Fortunes portfolio outperformed the S&P 500 by 1.65x.

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