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MV Weather Report: China's Winds Unable to Propel US Sails


Rain or shine, we reivew the day's biggest stock stories.


It was only a few short months ago that we were saying how the Chinese market was going to lead the US markets lower, ending the current "bear market rally." That chatter resurfaced on Wall Street today, as investors awoke to find China trading down -6.74%. Pretty soon, charts like the one pictured below will start making the rounds on The Street.

Click to enlarge

That's not a good image for the green shoot crowd. Charts like this always make the rounds, but I have rarely, if ever, seen them pan out. To further this notion, since this rally started, how many times has the market had a few day sell off before recovering and shooting to new highs?

Today on the Buzz and Banter, Professor Vitaliy Katsenelson gave his thoughts on China.

"Electricity was not the only economic statistic not controlled/calculated by the Chinese government; the Chinese showed that the true growth of the economy (when the global economy was sliding off the cliff) was a reported GDP at 6%. Guangshen Railway announced it's results a few days ago for the first six months of 2009: "tonnage of freight transported by the Company amounted to 26.5406 million tonnes (2008 interim: 34.5508 million tonnes)." – a decline of 23%."

It could have been a lot worse for the S&P 500, but the index completed the day lower by -0.81% and closed at 1020 off the lows of 1014.

After the China mess, what are traders doing with their money? Quint Tatro gave Buzz readers a peek at his portfolio.

"It has absolutely nothing to do with being a bull, or a bear it only has to do with assessing opportunity. The reason I am sitting on hoards of cash, and a few shorts is that last week I saw more opportunity to step aside and establish a few leans to the dark side, than I did going long. Traders would do much better if they would simply turn off the TV, drown out the noise and follow the tape, it will always tell you everything you want to know.

"At this juncture, I am remaining open minded. I have booked a partial in my China Short (FXP) raising stops on the remaining balance to ensure I don't give it back.

"I am respecting the end of day run here, yet I am yawning over the action as I can't see myself buying into an end of the month protection job by those making sure their statements look good.

"At this point it's a wait and see game, keeping accounts close to highs, the powder dry and the emotional tank full. Stay patient and let's see how the rest of the week plays out."

Heads up tomorrow on Construction Spending (-0.2% cons.) and the ISM index (50.2 cons.) which are both due out at 10 am. Like Quint stated, if you don't like the risks here, keep that powder dry. Have a great night!

No positions in stocks mentioned.

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