Reading today's headline, "Stocks resumed the week's rally Friday as Wall Street drew confidence from strong earnings from Oracle Corp. " is a good thing. But again, makes my stomach upset. Why?

Take a look at the following indicator that tracks the U.S. listed China stock universe

It has been a long time since I saw such a strong performance of Chinese ADRs. As the indicator reveals, 80 percent of the stocks are close to their 52week highs. Almost all of them are trading above their 20 day moving averages and many above the 50- and 200 day moving averages. So with all the stocks on fire, one may ask: when is the correction coming?

The only comforting measure is the relative strength index or RSI, as she suggests stocks have more room to go.

But again, such a stellar performance suggests a short term correction is inevitable. When? How bad? We don't know. the only thing we know is this: "no pain, no gain".

So get prepared for a bumpy road. We told you...

One more thing: don't panic. Just put stop/loss orders on your China holdings. STRONGLY RECOMMENDED.

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