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Two Ways To Play: Crumbling Wall Of China?


Strengthen your portfolio in good times and bad.


China Drops Again

Bloomberg reports China's stocks fell for a 10th day as concerns over economic fundamentals escalate and weigh on investor confidence.

The benchmark CSI 300 index fell 109.57 points, or 3.7% to 2842 at the close in Shanghai. This index tracks yuan-denominated A shares listed on China's two exchanges. It has fallen nearly 22% in the last 10 days and is down 47% this year as China's central bank continue to step up efforts to control inflation. For more, see Todd on TV.

From the Bull Pen: Bulls looking for an upside play might see one in Yingli Green Energy Hold. Co (YGE). Professor Sean Udall positively mentioned this stock even considering the overall Chinese market issues. Sell-stops can be set below $19 in the near term.

From the Bear Cave: Bears can play the downside in the China 25 index (FXI) as the stock has dropped below $140 support. Buy-stops can be set above $146 (100 DMA).

Adobe Earnings

Adobe Systems (ADBE) announced results for its second quarter. According to Bloomberg, the largest maker of design software said profits rose 41% due to its Acrobat and Creative Suite 3 programs. For the quarter earnings came in at $0.50 per share vs. expectations of $0.46. Revenues rose 19% year-over-year to $886 mln, largely inline with consensus forecasts of $880 mln. The company issued in-line guidance for the third quarter, with EPS in the range of $0.45-$0.47 per share and revenues in the range of $855-885 mln. Analysts are expecting $0.45 per share on revs of $877 million. The stock fell -2.6% in after-hours trading. For more thoughts on the tech sector, see Professor Bennet Sedacca's What's Next For the Credit Crisis? Part 2.

From the Bull Pen: Bulls looking for a tech play may consider Broadcom (BRCM); sell-stops in the near term can be set near the 50 DMA ($25.60).

From the Bear Cave: Bears that believe this is the start of a downtrend in ADBE can press the downside. Buy-stops can be set above $43.

For more ideas in real time throughout the trading day, check out Minyanville's Buzz & Banter.

Quick Check Around the World

Asian trading closed with the Hang Seng +0.12%, Nikkei -0.04%, Sensex +1.96%, Taiwan +0.39% and Shanghai -2.76%.

A quick check of Europe finds the CAC +0.96%, DAX +1.43%, FTSE +1.92%

As of 8:40 EST, S&P futures are trading higher +9.20 to 1369, and Nasdaq Futures are up +8.75 to 1999.

Look At Commodities

In commodities, crude oil is lower -2.36 to 132.26. Gold is down -6.50 to 880, Silver is lower -0.227 to 16.985, and copper is up +8.55 to 367.95.

The dollar index is up +0.083 to 73.693.

On the Radar

Current Account Balance: -$176.4 bln vs. -$172.5 bln cons.
Producer Price Index (m/m): 1.4% vs. 1.0% cons.
Core PPI (m/m): 0.2% inline.
PPI (y/y): 7.2% vs. 6.8% cons.
Core PPI (y/y): 3.0% inline.
Housing starts: 975 k vs. 980 k cons.
Building Permits: 969 k vs. 960 k cons.

9:15 Capacity Utilization: 79.7% cons, 79.7% prior
9:15 Industrial Production: 0.1% cons, -0.7% prior

Click here for the full trading radar.

Have a great day! Good luck!

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No positions in stocks mentioned.

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