Main points of interest: High Crude Oil Price; Artificially low refined oil price; Subdued demand from Downstream Industries

I knew this. AND I TOLD YOU! If you read two of my blogposts carefully, you would have got the message: DON'T TOUCH IT!

As I'm reading an article today about a possible Chinas bubble, I came to a conclusion that I have to write about the story from another angle. The hawks got more and more out there to predict how big the China bubble is and when it bursts who will suffer most. I'm proving them WRONG.

I want to share with you a screenshot from Chinavestor's Pre-Market report. It shows a very significant accumulation of Yanzhou Coal by institutional investors. Look for the third section called "Significant Corporate Actions". It shows institutional investor's action in Hong Kong - the home market for most NYSE listed Chinese ADRs. I don't remember seeing such a strong momentum build up for any stock lately. With that said, ifthe big bulls are there, I think we should folow. YZC is at $79.31 today. I say STONG BUY.

Stocks that are oversold big time and thus are ready for comeack today are ACH, HNP, CEA and YZC. Plus shares of Chinese fixed-line operators China Telecom Corp. and China Netcom Group Corp. gained for a second session in Hong Kong Tuesday on expectations they could soon receive third-generation cellular licenses. So that rally is not technical but fundamental in nature so don't try to find it on this screen. Still, CHA and CN are about to cheer investors to day, too.

I've talked to a number of people regarding current drop in Chinese ADRs and my feeling is that we are near the lows. For tomorrow, I agree with the Reuters commentator about prespects for the Hong Kong Stock Exchange but overall I think Chinese ADRs are going to change course and head back north.

I have a feeling that way too many investors don't understand how much Wall Street influences China ADR prices. Many say "I don't understand what U.S. subprime problem's got to do with China Mobile" They are right in their own turf but as the following two charts demonstrate, Wall Street has a tremendous impact on Hong Kong trading. On the contrary, Hong Kong trading has a negligible impact on the Street. And as you may know, China ADRs trading on U.S. exchanges follow Hong Kong prices. So you really should look into what moves Hong Kong.

Regarding the current plunge, we have to live with market volatility as was addressed in the "Strong stomach needed" article in the August 2007 Newsletter. So for me, Chinese shares shine when U.S. related news drag them down. They say: BUY NOW.

China stocks post biggest weekly loss in a decade: China's main stock index closed Friday with a weekly loss of 8 percent, its biggest weekly drop since May 1997. Chinese ADR portfolio was just as bad with no clear indication where the bottom is. Look up from the table below how your Chinese stocks did.

I have been following Chinese ADRs (U.S. listed Chinese companies) for a long time to realize a change in the dynamics of new IPOs. Investors have to be very selective when it comes to Chines IPOs, especially that high quality Chinese companies seems to choose Hong Kong and Shanghai lately.

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.

Days like this offer great trading opportunity for the intelligent investor. For one, U.S. markets are shaky and for two, Beijing has told asset managers preparing to launch overseas stock investment funds to cut their exposure to Hong Kong. Bad combination for the market but great for the smart trader.

Look out world, here comes China and Shanghai, in particular. 4,000 skyscrapers, great modern technology, 20+ million people and more.

The last trading day of September was a happy one. Our favorite proxy for the overall China ADR* universe, the iShares FTSE/Xinhua China 25 Index (FXI), closed at $180.00 marking an exact 20% run over the month. What makes this rally even more remarkable is the strong underlying volume. We know that Hong Kong is the home market for the most prominent FXI components. So we found comfort in the news that Hong Kong blue chips rose 0.3 percent amid unprecedented volume on Friday, September 28th, closing out the quarter with their best gain since the end of 1999. The Hang Seng Index gained 13.6 percent for the month and 24.7 percent for the three months ended in September.