| Keep Your Third Eye on China |
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| August 28, 2007 |
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While it’s of utmost importance to keep both eyes on the stocks you are currently in, don’t get tunnel vision.
If you are only aware of what directly affects you now, you just might get blindsided by what is happening around you. The market should be seen like a game of dominoes: You need to be conscious of what is going on in front of you, behind you and side-to-side, because when one piece is pushed—either up or down—chances are that it will affect the others.
For instance, stocks like CMED and SNDA are reporting this week. Now here at Trending123, we aren’t currently playing these, but we do know that it’s smart to keep an eye on them in case we do decide to play them soon.
There’s a momentum building in the Shanghai and Hong Kong markets, where they are both currently at new all-time highs. This tells us there’s one glaring difference between China’s market and others: It’s clearly bucking the trend of the global sell-off.
We can probably thank the Olympics (coming in 2008 to Beijing) for China’s continued climb up the charts. So you see, not everyone is in the doom-and-gloom phase of the market.
China’s enjoying the froth, and if you stick with Trending123, so will you! We are currently entering the “fun zone” of being overbought. I’ve been telling my subscribers for months now that I am targeting 5500 for China stocks, but that is subject to change, so please keep yourself current—I am offering a limited-time reduced-price subscription to my Trade Talk Weekly subscribers—and click here for the latest.
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Now let’s get down to the nitty-gritty! You’ve got to position yourself now to profit from this increased momentum that we are seeing. So how do you do that? By getting into the best possible stocks that will see the most benefit down the line. My favorite stocks to play:
 Tessera Technologies (TSRA)
TSRA develops and licenses miniaturization technologies for the electronics industry. Tessera offers its technology to the customers primarily in the United States, Asia, Europe, and Japan.
- KEY POINTS — Resistance is at all-time highs. The stock has gone through a few upgrades lately including a recently announced $100 million share buyback. It’s waving its high-beta momentum flag strong and proud right now. This chip stock is probably going to be one of the best performers in the second half of the year.
 ChipMOS Tech (Bermuda) Ltd. (IMOS)
IMOS provides semiconductor testing and assembly services for liquid crystal display and other flat-panel display driver semiconductors worldwide, as well as for memory products in Taiwan.
- KEY POINTS — A low-beta stock, IMOS has been going down on lighter volume of late. I’m fairly sure that it will breakout soon—and to the north! From a risk/reward point-of-view, if you are into stock appreciation over time—which I view by the end of this year—then this stock will likely double, if not triple your money.
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Some things to keep on your radar in this trading week…
Exaggerated price moves should be expected, especially given the light volume in August.
The Fed Open Market Committee releases its August minutes today. This is usually an excuse for substantial price moves in one direction or the other.
Be aware. Be cautious. Be in touch if you need some help along your trading way!
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Volatility Index (VIX)
When it comes to technical analysis, indexes aren’t just for tracking stocks. The Volatility Index, or VIX, is designed to measure market volatility. Let’s take a look at how it works.
The VIX was created by the Chicago Board Options Exchange (CBOE) in 1993 based on S&P 100 Index options. It was updated in 2003 to more accurately reflect the market by using S&P 500 Index options (SPX). Using a weighted average of these options with a constant maturity of 30 days to expiration, it shows the expected market volatility for the next 30 days. And since it’s calculated using real-time quotes, it’s current up to the minute.
So how do you use the VIX? Well, values above 30 are considered very volatile, and values below 20 are considered more complacent. Earlier this month, it actually hit 37.5. Now it’s around 24, after plummeting 31% last week alone. (As you can see, even volatility can be very volatile.) So are we out of the woods yet as far as volatility is concerned? Click here to find out.
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Sincerely,
John Lansing
Trending123
P.S. Turn your attention to sudden profits! Gains like 49.49% in Central European Distribution, 79.41% in Phazer Corp, and 109.91% in Zoll Medical are possible at Trending123, but our best opportunities are in stocks that we can get in and out of quickly for 10%–30% gains. If you’re game for these kinds of profits, then now’s the best time to join Trending123.
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