China sector- When everyone and their brother
is shorting an entire sector after it's already down 60%+(for most stocks), you know we're near a bottom. Right now there are articles all over the world about how the China smallcaps are all no good, not to be trusted, and everyone should short them cause they're all likely a scam. Well from my experience, it's usually near a bottom when the public gets into the same game as the major shorts.
Thing is, although I don't know why more of these China stocks don't pay dividends, I do know one thing. With the massacre of the China sector in recent months on par with the Merchant Energy sector after Enron, and the Financial sector after Lehman, I'd have to say there will be numerous opportunities. Knowing where the bottom is impossible, but it's my opinion now that so many China RTOs are in the 1.5 PE or less going forward range, we are not far from the bottom. I'd say another 20% for your average RTO and IPO to come down, and that's about it. Also it's obvious that going forward 10Ks and all SEC docs will be more trusted, so valuations should actually increase once the massacre is over.
So to name a few, I'm calling a bottom for LPH at $1.10-$1.20, LLEN at around $3.50, CNTF at around $3.50, YONG at around $3.75, AERL at around $5 to name a few.
Wade
