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Two Ways To Play: China Hits a Great Wall

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Strengthen your portfolio in good times and bad.

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Chinese Officials Sound Alarm

Two Chinese officials are warning their country may be headed into a tailspin. According to Bloomberg, Li Yizhong, head of the Ministry of Industry and Information Technology, and Liu He, a senior economic policy official, said overcapacity exists in all industries. They're also of the mind that China, the world's fourth-largest economy, won't bottom until the first quarter of next year.

Exports, imports and manufacturing activity dropped significantly last month, and should continue to do so before a stimulus package kicks in in the second quarter of 2009, He noted.

China's economy has cooled for the last 5 quarters. The World Bank forecasts a 7.5% increase next year, the slowest in nearly 2 decades.

From the Bull Pen: Bulls can look to China Mobile (CHL) for a short-term tactical play. The stock broke its intermediate downtrend and is currently basing near $50 - a healthy sign. Sell stops can be set 2 points from entry.

From the Bear Cave: Bears might see a better opportunity if the China 25 ETF (FXI) can rally to near $37. This marks the 50% retracement from its intermediate downtrend. If and when.


Quick Check Around the World

Asian trading closed with the Hang Seng -5.48%, Nikkei -5.56%, Sensex 0.46%, Taiwan -3.74% and Shanghai -3.81%.

Across the pond, we see the CAC -5.26%, DAX -4.59%, FTSE -4.17%,

As of 8:30 a.m. EST, S&P futures are trading -35 to 839, and Nasdaq futures are -37 to 1152.


A Look At Commodities

Crude oil
is trading -3.01 to 44.99. Gold is -8.00 to 816.90. Silver is -0.340 to 10.00, and copper is -13.15 to 135.50.

The dollar index is -0.261 to 83.577.


On the Radar

Economics

08:30 Producer Price Index MoM
08:30 PPI ex Food and Energy MoM
08:30 Producer Price Index YoY
08:30 PPI ex Food and Energy MoM
08:30 Advance Retail Sales
08:30 Retail Sales Less Autos
10:00 U. of Michigan Confidence
10:00 Business Inventories

Happy Friday! Good luck!

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No positions in stocks mentioned.

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