Large cap Chinese stocks have been underperforming S&P 500 and under pressure for a long time and actually topped out in August of 2009 on fears of higher inflation, monetary tightening and hard landing.

This is most apparent in the chart of $SSEC, which has lower highs and lower lows since then - both weekly and daily chart does not look good. But even $FXI which tracks large cap China stocks listed in Hong Kong also has been practically flat since August 2009, while S&P up substantially since then.

China Small cap etf $HAO looks a bit better, but still up only just about 10% since August 2009.

Other emerging markets also have been generally weak since November 2010 while China is especially weak.

By the way, emerging markets (as well as commodities and commodity stocks) generally made a bear market bottom in late 2008 - in advance of March 2009 bottom in developed markets

Could you comment on this strong headwind and (short squeeze aside) do you expect China small caps to buck the trend and go up even if large caps remain under pressure.

I prefer AEZS to SNSS. Both similar market caps and cash rich. But AEZS much more diverse and advanced pipeline, while SNSS - reverse split by March

I prefer CYCC to SNSS - better and more advanced drug for AML with SPA. SNSS on the other hand has reverse split in its future.

Yes, looks like professional money managers loaded up on UUP calls to hedge stock portfolios from decline because UUP calls are much cheaper than S&P puts and almost perfect negative correlation between UUP and S&P. Just check the surge in open interest over past month.

But the question is does it make you feel better in this trade or worse?

There is no contradiction. His timeframe is 1 month, not 4 years. I am too lazy to look up what happened 1 month after June of 2003, but if he says on average -1.6% a month later for 10 lowest readings, it still allows for one or more positive performances for the market a month later (out of 10). Also, he never says that the lower the sentiment reading, the more the market should plunge, apparently he thinks the odds are about equal for the 10 lowest sentiment readings.

VVUS added at 8.51, chart looks much better now

VVUS - on the weekly chart it did break the uptrend from March lows on decent volume. On the daily chart there is a huge megaphone falling wedge with lower line currently at 6.5 and upper line at about 10 and a triangular consolidation inside. The chart is bearish, but the story and valuation is very good, so I was waiting with several GTC buy orders below 7, none of them were hit as it only got down to 7.07. Finally on Tuesday the CEO promised "imminent" results from Phase 3 study of Avanafil, its second drug (how nice of them to have 2 different drugs, not just one) and I finally bought on the way up at 7.51. If the "imminent" results are good, it may get to 10 area in 1-2 days where it would run into heavy overhead supply from those who bought above 10 getting out at breakeven or small loss, we'll see. I figured that even if the odds are 50-50, it still makes sense if downside at 6.5 is less than upside at 10.

NVAX - on the weekly chart it broke the uptrend line from March lows in the past 2 weeks, but on low volume, so I am not emphasizing that too much. On the daily chart we have a triangle with lower uptrend from the second October low to November low. But upper downtrend trendline can be drawn two ways - first way is from September 7.50 high through late October high . The second way is from bottom of mid Sept gap to October high. We broke out of the first triangle near the apex on low volume and that ended up with a whimper. We are still in the second triangle, but again the apex of the second one is fast approaching and I suggest disregarding it as soon as Tuesday. On Friday we bounced a little from the uptrend, but not impressively so far (low volume). My best guess is that in the absence of news it would morph into a rectangle 3.30-4.50 with 3.70-4.10 congestion area in the middle of it and at least 3.70 or lower coming first. Otherwise if it goes up, it would need to get through 4.10-4.20 area on high volume that would target 4.50 quickly and a break above 4.50 would target the gap fill of 5.50.

CFN - monster rising wedge connecting Aug, Sep and October (not November) lows and September and October 11 highs.
which morphed into a flag in early November (draw line connecting late September and early November lows).

From October 11 there was a downtrend, which was broken with a huge white candle at the end of October with close at day high . But the volume on that candle was just average and breakouts without volume are not sustainable and so it quickly reversed the next day. Then the opposite happened - in early November it broke down below the lower line of the wedge (uptrend), but again - on just average volume and so breakdown was also quickly reversed.

From early November lows we had 2 white candles , the second one was on high volume , and - behold, it was sustained. Note the good sandwich at 24 (white candle, red candle, white candle) - this is the opposite of bad sandwich of WATG at 13 (red candle, white candle, red candle). The consolidation at 24 looks like a midpoint consolidation and since low was 22, this gives target of 26 = 24 + (24-22).

Near term target was reached and although past 4 days have been above the uptrend line of the rising wedge - the breakout was not confirmed by volume in any of the 4 days. So this suggests that the brekout would not be sustained again and looks like it is headed down to the congestion area about 23 where it would be supported by lower line of the flag, the 50 day moving average (currently at 22.05 and rising) and the downtrend line from October.

When it gets to this support wait and see what happens next - for bullish case it has to bounce quickly and strongly like it did every time in the past. So if it would just hang there for several days in a row on low volume, this won't be good

GFRE. Note the increase in volume on the latest downleg and bearish divergence in RSI lower low while stock price slightly higher low. I would not buy it here. 50 day moving average currently at 8.04 is rising from below to support the stock. In the best case scenario it should just sit here and consolidate on low volume until 50 day moving average comes up from below. If it breaks 50 day moving average on high volume then it goes to about 6-6.5 congestion area.

WATG. 200 day moving average 8.30, horizontal support at 8 and finally 10.75 * 0.75 = 8.06. See you there. In hindsight longs should have been stopped on break below 14 and then shorts entered after that ugly sandwich at 13, covered at 50 day moving average below 12 and then re-entered couple of day later on break of that 50 day moving average.

But it is well known that swine flu vaccine is poison and the goal is to reduce and dumb down the world population. So obviously Wall Street should be reduced and dumbed down too.

Edit: Taxmantoo has better explanation

vvus. Uff, I did not want to buy it at 10. Now it is close to filling the gap (bottom of the gap is around 6.92 and yesterday's low was 7.07) and still don't want to buy it here because the chart is so bearish that I am still waiting for it to drop more. Just filling the gap is not going to be enough. Volume is neither here nor there - neither selling capitulation, nor apathy. The consolidation between 7.5 and 8.5 looks like midpoint consolidation in a downtrend. 200 day moving average is at 6.09 and rising slowly and 6.00 is major horizontal support.

How about running up on the underside of the wedge? That would certainly keep the bears excited (as the wedge would still be broken) while market keeps moving up.

The bottom will be when insiders will start buying. So far insiders are not buying anything on your list except 10k of PARD.

What's the big rush to buy back today? I would wait for 50 day ma on S&P at 1043 or so, we can get there as early as tomorrow

Ok, I'll bite. I was scared to go long in March and now have no fear of bear claws; well, maybe later, but not yet. 50 day ma on $SPX is at 1046, that's max downside from here. On October 2 50 day ma nicely stopped the pullback. If it gets there and does not bounce strongly right away, then start worrying.

You are doing very well, Fabian. But to balance the story of success here is a story of failure. I thought I'd get some biotechs in early September thinking that they won't be correlated with S&P and would be supported by swine flu scare and company specific developments even if the market declines. They seemed like winners with good stories and were up multiples from March lows. I bought them on nice pullbacks, but then they got much lower. So I bought them too early. I traded them a couple of times by partially selling the spikes and buying back in - but always bought back too early because I was afraid to miss the next big move, but they went down more. In hindsight it was a sector rotation out of biotechs lasting more than a month and I bought them too high and too early. So they went down when S&P went up and went down when S&P went down. They are still stuck in consolidation patterns. I had one winner out of 8. It is up 80% in 1 month, but of course I put the least amount of money into that one as it is small and illiquid and that win did not compensate for the losses on the other 7. And I did not add to the only winner on the way up, fortunately did not sell on the way up too. But still refusing to add to it now as it seems severely overextended. I was so carried away with these crappy biotechs that I did not pay any attention to shorting the market - at least that part turned out well so far. Lesson learned. Do not fall in love with a stock, if it does not work, take the loss while it is small and move on.
I look at the charts of them now - I see consolidations on declining volume, I think that the breakout is imminent, so don't want to sell here. The right question is - would I buy them at these levels if I did not have them? Yes, if I did not have them I would buy small positions here and then add on the way up. This means I should partially sell downright away, but it is so hard to part with them even partially. I can never catch those breakouts in real time as they happen. So I sit and wait for the breakout while consolidation continues and continues and price slowly drifts downward. And I caught a couple of breakouts and partially sold into them, but then I bought back too early - why did I buy back too quickly without waiting for the stock to settle down more - got carried away with the hype. Well, enough rambling for now.

swine flu stocks going nutz

Heard on Bloomberg yesterday that they counted the number of move-ins compared to house sales and found out that house sales up slightly (month to month), but move-ins are actually down and explained it that many foreclosed properties were bought by investors who are then trying to rent them out to cover the mortgage payments, but they are not finding the tenants.

And junk mail and junk e-mail soliciting $3000 workshops on how to get rich quick in real estate are already coming back, so buy the dip in housing is still alive.

SQNM illustrates well the danger of a D stock. It went D big time in April and now went another D big time last night after firing the top management. Are all the bad news priced in? I am not so sure. The new management might find some more bad news to report before they are done cleaning up the mess.

GMCR should move inversely to coffee futures because it buys coffee, not grows it. I wonder how many "investors doing their homework" think that it is a coffee stock and should move in the same direction as coffee futures.

In the morning sold half of srs for loss and bought cvm instead. At the time I planned to reload on SRS on midday bounce in the market and pullback in SRS. But then I got tied up midday and then just before close seeing that cvm is higher and srs lower and market is closing near day high and NDX positive - ouch, sold the rest of srs and bought more cvm instead. And tomorrow instead of staring at loss on srs will be staring at profit on cvm at least before the market opens. Better late than never.

Another good reason is that SVA management will be in New York Monday and Tuesday pumping the stock (I mean that in a positive way because currently no analyst covers it) and presenting at a conference

Bought some SVA at 8.88. 8 is lucky Chinese number.

SPY should trade at zero premium to S&P when it goes ex-dividend like it is today. After that the premium should slowly rise due to accumulated but not distributed dividends.

VVUS the gap is from about 7 to 10 (10 was pre-market low in the morning of the big news). Looks like it wants to dip under 10 to scare off everybody who bought after the big news. Question - is there a rule of thumb of how much of gap should be filled when the news were so good? 1/3 of the gap? 1/2 of the gap?

With these biotechs I am not having much success buying the high volume breakouts, but better luck with buying low volume pullbacks to support. Today bought NVAX at 5.05 and have room to add if it drops to 4.60. As for SVA, in hindsight, the breakout of ascending triangle was too close to the tip of the triangle, maybe that's why it failed. Now let's see where it goes next, somewhere in between 8.50-9 would be nice.

Gold needs to close above 1000 for 3 days in a row for a breakout to be sustained

After closing above Dow 10k by Friday? That would kill all the remaining bears.

Ok. Stocks rising allegedly due to retail sales better than expected and Warren Buffett saying he is buying stocks right now. As for Warren Buffett, maybe he is buying 2 stocks (still plural) and selling 20 and would still be telling the truth. As for retial sales, they were just saying on Bloomberg that seasonal adjustment was 3 times more than the gain in retail sales and if that was not enough most of the spending was on bare necessities anyway.

I am a long time holder of Gazprom and Sberbank. These companies have large government stakes, so Putin does not threaten them. President Medvedev is a former head of Gazprom. They are large and ineffiecient of course, but undervaluation makes up for it. One thing Gazprom is not, it is not a play on a rebound in price of North American natural gas. Natural gas prices in North America are completely separate from natural gas prices in Europe because there is no gas pipeline between Europe and North America and shipments of LNG are still negligible.

Bought EUO (double short euro) 18.08. Divergence today with commodities down, but currencies up.

VIX and VXX today reversed the usual pattern of high near the open and slowly down all day and low near the close. Let's see if this continues. Yen also strong today. Not the time to be aggressively long this stock market.

More evidence that everything is well and crisis never happened, so party on. US Corporate bond spreads are not only back up to pre-Lehman collapse levels, they are back up to pre-Bear Sterns collapse levels. But Asian junk bonds are at the highest level since 2004. Speaking of bonds, why is US 30 year bond moving up in price and down in yield ? Wasn't it supposed to go down in price and up in yield as economy improves and inflation concerns rise, investors flee the dollar and US Treasury floods the market with supply just as Fed is stopping its purchases of Treasuries.

So, if VVUS drug Qnexa is actually a low dose combination of two drugs that are off patent, then is the combination itself patented or somehow protected? And even if it is protected , what would prevent a competitor from combining a slightly different combination (55-45 instead of 60-40 or whatever) ?

Shorted Spanish banks BBV and STD. Could not find a good reason why those bloated pigs rose to levels of pre-Lehman collapse last September as if the crisis never happened. Even COF, which is perhaps the crappiest major US bank, is about 20% below the levels of pre-Lehman collapse.

Serious cracks appearing. Copper and yen crosses (down and near day low) seriously not confirming stock rally so far today. And FAZ is up slightly despite indices up. Definitely not a time to be aggressively long.

ABX finally capitulated