Given the tremendous impact of the “bail out” plan on American stock markets, this Newsletter is non-traditional in a sense that it will give investors guidance for the upcoming days versus a month. To put latest developments into perspective ...

DJIA lost 344.65 points yesterday, a plunge Chinese ADRs could not escape. Results of weak U.S. performance proved to be disastrous for Chinese equities listed on the NYSE and the NASDAQ. As the following picture demonstrates, the China NASDAQ Index (CQI) lost 46.5 points and is down 20.46% YTD.

Shares of Chinese companies listed in U.S. exchanges performed relatively well in July, spurring investor optimism. By term “relatively well” I mean compared to the DJIA or compared to previous months of the year. As the following chart tracking Chinese equities in Shanghai, Hong Kong and New York testifies, July was a comeback month for Chinese and American shares alike. The DJIA eked out a modest 2.1% gain for the month but the true beneficiaries were the U.S. listed Chinese equities. Looking at the performance of the China ADR Index in dark orange, the index gained an impressive 8.0% just in one month, closing in on the Hang Seng and the DJIA.

Here is a snapshot of today's big movers from the Chinese ADR universe. Focus Media Holdings defies overall trend, the DJIA lost almost 200 points today already, helped by better than expected 2008 Q2 results and strong Q3 outlook. Focus Media Holding shares jump on Q3 outlook. The stock is trading up $2.76 or 10.51% today.

Chinese ADRs are caught in the wind along the DJIA and have gained significant momentum in the last three trading days. Number of Chinese ADRs trading above 50 day-moving-averages or DMAs increased from alst week to 13 with two of them reaching the "overbought" status, more than last week. Four ADRs are classified as oversold, less than last week. Overall, it's a pretty strong showing for the China plays.

Oil is ruling the price of shares of Chinese companies listed in the U.S. today. Asia's largest refiner, China Petroleum and Chemical Corp. or Sinopec (SNP), is top gainer among Chinese ADRs while another oil industry giant, offshore specialist China National Offshore Oil Co. or CNOOC Ltd. (CEO) is top loser. What's the reason for such a different reaction to softening oil prices?

There is not much direction to find for U.S. listed Chinese ADRs in Asian trading this morning. Trading in Hong Kong was extremely weak - in fact turnover in Hong Kong recorded the lowest volume this year. Shanghai is obsessed with another mega IPO, this time China Southern Locomotive is going public, raising concerns that already slim liquidity might dry up. This is the time when technical indicators are extremely useful. One of them is the so called Overbought / Oversold indicator, or simply OBOS. This tool looks into stock trading characteristics and determines if a stock went up too much too fast - thus is susceptible for a pull back or just the opposite. The following picture is a screenshot of Chinavestor's OBOS indicator posted for Premium Subscribers before the opening bell. Based on the indicator, three stocks look interesting for daytraders today: NetEase (NTES), China Unicom (CHU) and Baidu,com (BIDU).

Chinese ADRs have accumulated substantial momentum lately. We like to use different technical indicators to gauge the market and pick up stocks that offer trading opportunities. One of these indicators we use is daily moving averages or DMAs. A stock has to satisfy the following criteria to catch our attention: Current price has to be above 50 DMA - first column under Technical section Current price has to be above 200 DMA- second column under Technical section 10 DMA has to above 30 DMA- third column under Technical section Additionally we like when 50 DMA and 200 DMA curves are positive or show an increasing pattern.

Chinese ADRs are trading mixed today after the lunch with NASDAQ listed names shining more. Baidu.com, China's premium search engine company, is up $7.15 or 2.15% at $339.55, extending gains from last week following better-then-expected earnings. As the following table testifies, large cap NYSE listed Chinese ADRs are pulling down the China ADR Index (CAI). The index lost 24.4% year-to-date (YTD) with notable difference between NASDAQ and NYSE listed ADRs. While the market cap weighted overall index lost almost 15% YTD, NASDAQ listed Chinese ADR Index or CQI holds up much better by shedding -15.4% YTD. This performance is not much different then major U.S. indices themselves.

Fourth week of July was the week we've been long waiting for. Price of oil tumbled while Wall Street ended the week on a high note. Chinese companies listed on American exchanges performed well, too. As the following summary table of the Chinese ADRs listed on the NYSE and NASDAQ suggests, double digit gains were quite common - see column 5 market "change". In fact China's premium search engine company, Baidu.com (BIDU), rallied $40.86 since last Friday in just five trading days. The company announced 2008 Q2 earnings on July 23 after the close sending its shares remarkably higher the next day and breaking through the $300 resistance level.

Oil came back $2.16 to settle at $131.04 at the New York Mercantile Exchange sending investors to cash in previous gains. Bank of America reported better-than-expected losses following similar announcements from Citigroup, JP Morgan & Chase and Wells Fargo. Some take this as if the worst is over however earnings prospects are soft for many industry leaders such as Merck and Schering-Plough Corp. Despite weakness in the U.S. markets shares of Chinese companies listed in the U.S. ended the day on a high note. The overall China ADR Index (CAI) gained 14.38 points today with NASDAQ listed Chinese ADRs outperforming their NYSE counterparts.

After two hours of trading it seems as if we got it right: oil refiners Sinopec (SNP) and Petrochina (PTR) are up $2.73 and $2.72, respectively while CNOOC Ltd. (CEO) is on the bottom of the list by giving up $2.17. You might call it an easy shot after softening oil prices it was no brainer how the Chinese oil triumvirate will trade.

Lowering oil prices will help Chinese refiners to trim losses - so it should give a sizeable boost to Asia's largest refiner Sinopec (SNP) and also to Petrochina (PTR), China's largest integrated oil company. CNOOC Ltd. (CEO), China's offshore specialist with no refining capacity will feel a pinch - a 2%-5% drop in a few days is likely.

Shanda is the largest online game company in China and currently manages more than 20 online games. Shanda's products range from massively multiplayer online role-playing games (MMORPGs) and casual games to the family entertainment platform and online game platform. In 2008 Q1 net revenue rose by 9.2% QoQ and operating income increased 11.9% QoQ. MMORPGs remained the most profitable line and generated approximately 81% of its quarterly revenue. In addition, revenue from casual games grew by 36.5% QoQ, partially due to the Chinese New Year and student holiday. Under the Come-Stay-Play (CSP) revenue model, Shanda’s active paying accounts (APA) have increased by 19.2% to 6.03 million, but at a low conversion rate of 8% (to paying customers). Meanwhile average monthly revenue per active paying account (ARPU) of MMORPGs decreased 10.10%. Also, Shanda has decided to delay the launch of Tianxia in consideration of the recent catastrophe in Sichuan. A further concern about the business model Shanda will apply to the launch of Tianxia brings more uncertainties about the game’s profitability. Looking at competition, there are nine major game operators in China at present with ever increasing competition. And just how strong competition remins, let's just take a look at operating and net margins of four large game operators: Shanda Internactive (SNDA), The9 Ltd (NCTY), NetEase Inc (NTES) and Giant Interactive (GA).

We took the risk to say a month ago that “we think Chinese equities are nearing the bottom. Looking at Asia and China in particular, we find both macro and micro economic data to fuel our optimism. “ Since then the China ADR Index (CAI) rallied 7.5% in line with the Hang Seng’s 7.0% comeback, outshining the Shanghai Composite’s modest 3.7% rally. Have Chinese equities bottomed out?

Last week we published a study that looked at 10- and 30-day moving averages and their crossing patterns to find momentum stocks. We continue with some technical analysis today by introducing the Overbought/Oversold techincal indicator. The one we use gives investors a gauge of the market in a snapshot by laying down all Chinese ADRs on a single paper. This method makes it very easy to find stocks that are out of their normal trading characteristics; thus offering trading opportunities.

Wall Street saw better days then today. The DJIA is down over 300 points on high unemployment rate and record oil, approaching $150 a barrel. No wonder, shares of U.S. listed Chinese companies, or ADRs, follow suit measured by the broad China ADR Index or CAI. As the following table demonstrates, Chinese ADRs lost 3.41% today however there is a significant difference between NYSE and NASDAQ listed ADRs. While index heavy NYSE listed China stocks lost ground, measured by the China NYSE Index (CYI), NASDAQ listed Chinese ADRs hold ground thanks to a superb performance of NetEase (NTES), The9 and some solar companies.

There is not much direction to find in market sentiment lately. While February turned to be a comeback for Chinese shares listed in the Hong Kong Stock Exchange, the same stocks nosedived in the U.S. the last trading day of the month tracking major U.S. indices lower. As the chart on the page demonstrates, February was somewhat an improvement over January for stocks in Hong Kong measured by the blue chip Hang Seng Index. Stocks posted their best monthly gain since October in Hong Kong. At the same time, the selloff on February 29 in the U.S., a day the DJIA fell 315.79 points, left the stock market stuck in a rut with no clear indication to get any better. As the saying goes, it will get worse before it gets better… The U.S. listed stock universe, measured by the China ADR Index (CAI) has not been able to recover January losses and fell heavily on Friday along overall market sentiment.

Oil companies pushed the China ADR Index (CAI) up 15 points by noon, easing some of the pain PetroChina stockholders had to endure in 2008. PetroChina is trading at $156.28, up $4.87 or 3.22% at noon. Offshore specialist CNOOC Ltd. is rinding on the back of strong oil prices, too. The stock is up $7.78 or 4.91% at $166.33 by noon.

U.S. listed Chinese stocks came back strongly by the end of the day, NYSE names in particular. China Mobile (CHL), China's largest mobile operator came back especially strong by gaining $2.67 or 3.75 percent on Friday to finish at $77.39. Some of the institutional investors made use of the opportunity to pick up good quality stocks.

A near 20 percent correction in four weeks has wiped $700 billion off the Shanghai Stock Exchange, making global investors nervous about a possible China meltdown. Considering the 132% run of the Shanghai Composite in 2006 and a subsequent 125 percent run in 2007 before the current pullback, a bubble theory has ample room to develop. The question is this. Is there a bubble and if so how to hedge against that?

China computer game developers have been working for foreign game developers to make a living for a long time. However, several years of hard working and accumulated know-how eventually brought about a significant change. Numerous domestic developers have started to spring out based on self-innovation. In-house, self-developed games already account for 64.8% market share of the Chinese online game industry.

What did I predict? If U.S. falls Chinese small caps will tumble. Here it is. Next week Monday and Tuesday will be even worse. Recovery on Wed-Friday. Watch!

Mr. Alan Greenspan is still a heavyweight. Some secondary remarks from the former FED Chairman, e.g. the U.S. is showing signs of recession, shook global equity markets overnight.

Earnings announcements are one of the most important moments for public companies. This is a bonanza for fundamental analysts who can x-ray the companies by examining these financial statements.

While the premise of this article may be surprising to many, e.g. investing in China has never been more secure, the emergence of the Chinese markets is real, and recent events strongly support this premise. Who could have predicted only a short time ago that the IPO of the Industrial and Commercial Bank of China (ICBC) on October 27 would draw a record- breaking demand for a public offering?

Investing in Chinese equities is a risky business. But one can ask: how risky? Is there a reliable risk measure geared specifically to investors who navigate in the Chinese stock universe? Our current Newsletter addresses this very important question and will shed light on stocks that are relatively safe and stocks that you should avoid.

Based on the enthusiastic feedback we received from several of our clients, we attempt to use the same methodology to give a unique analysis of the NASDAQ listed Chinese stock universe. What makes our analysis very relevant is that seventeen liquid Chinese NASDAQ names reported quarterly earnings in the month of May, 2006.

I can’t help but quote from our February Newsletter, page 4 last paragraph. “Based on our latest field trip to China, Chinavestor.com expects The9 Ltd. (NCTY) to report a nice surprise. On the other hand, we did not see much activity of Shanda’s line of products and expect the battled game and home entertainment developer to slip.” End of quote. So when Shanda released earnings after the close on February 27th, disappointing news did not surprise us. China’s top online game operator said it swung to a quarterly loss and missed Wall Street revenue targets as online game sales weakened, sending its shares down 19 percent after hours.