Say it ain't so

Bianca Beauchamp

4:22 am (Hawaii) This can't be true. The Fly, Le Fly, retiring from the market? He may be convinced, but I say no. Why? He's had an emotionally draining few days recently. If he were to "retire" after a few boring days, successful or not, that would be a sticker. Not this. Not when he's exhausted, busy and tagged with the daily grind of being a parent/megamillionaire trader/interweb boss.

Other than that, the Dow is +255, Nas +41, S&P +23, all up 1.6 to 2.0%

I haven't tried anything since selling DGP in premarket. Things are positive for bulls, but the stuff I like are waffley. Indecisive. Lack of conviction from the buy side. I'll stay on the sideline in that case. I wanted to re-enter DGP, maybe even enter AGQ. But the run may be done for the morning, maybe the day. DGP sits above 55, which refuses to break. AGQ is sitting in the 126-127 area.

FAZ stays above 56. I'm looking for 50, greedy pig that I am.

My Regular watch list is 86% green, 14% red. Hasn't been that bullish since ... ever. AGQ, MCP, FAS, CHGS, GNK, YOKU, PSLV, MWW, SLV, DGP, YZC, SINA, UCO up 5.5% or more. Volume? Not a factor yet, but these steep gains have me thinking that we may be at a pivot point today, or we had one yesterday or Friday.


Bianca Beauchamp Black Transformation from Martin Perreault on Vimeo.

Shanghai market may Sit down soon

From Gene Sit, veteran China investment manager:

BusinessWeek: Waiting Out the Bubble

Why do you think the damage won't be too bad?
We see a soft landing because we think fundamentals will continue to be good. China's GDP might not be 10% to 11%, but it might be 8% to 9% after the summer of 2008. That's because China now has the money, with growing reserves, and the trade numbers continue to be quite favorable. The government has the resources to build the country's infrastructure, and it can improve living and environmental conditions. Plus, the savings rate is very high, and corporations are making money.

A rare Monday down day

So much for fears over the People's National Congress in China. While Chinese stocks held ground and some even soared to new highs — unexpectedly in the eyes of some concerned investors and traders — it was the U.S. market that folded a bit. The Dow Jones fell 108 points (0.77%), Nasdaq dropped 25 points (0.91%) and S&P 500 dipped 13 points (0.84%). The Dow fell under 14,000 to 13,984. Was it Citigroup's dismal earnings report? Possibly, but the Co had already warned about lower earnings. Was it crude oil, which finished the day above $86 a barrel? Not really. The market has gained significantly on oil's up days in the past few weeks.

Maybe it's just a little more fear and profit-taking than usual. More financials will report this week. But with Yahoo (Tuesday), eBay (Wednesday) and Google (Thursday) reporting this week, the Nasdaq will have some volatility. I'm not expecting much from the first two, though Yahoo's earnings from Asia could be significant. How soon will eBay penetrate the Chinese market? I won't be holding my breath. Google failed to meet expectations last quarter, but their game plan is sound. Spending on R&D and new hires as they expand in China is acceptable in my book. The G-phone is a bonus.

China held up, which still sounds a bit surprising. Just a little. New Oriental Education and Technology (EDU) launched to a new high after announcing earnings before the open. EDU closed on Friday above 66, opened today at 71 and closed at 75. That was a nice response to the PNC's first day. Nearly all the Chinese stocks that I watch are virtually the only greenies on my lists. CMED is at 42 (after hours). FMCN is up 1.7% to 59.15. CHL is up 1.9% to 88.80.

China and oil continue to be a glorious combination. PTR is up 9.2% to 236 and CEO is up 5.7% to 188 (after a mid-day high of 192). CEO was at 92 on subprime meltdown day (August 16). The stock was up big in premarket on less than 10,000 shares, triggered by crude oil's gain. I think.

CHL is up 1.9% to 88.80. STV was surprisingly positive, now at 50.15 (up 2.1%).

No, China wasn't perfect. BIDU dropped 2.7% to 314. SINA and YGE were down. Even Macao plays LVS and WYNN were down.

Note to self: don't fight the trends. Oil rules. China energy and pollution are going to be Quarry Logic fixtures for decades to come. The Chinese middle class will not be deprived.

Bully for Baidu

Is this the right stop? Do Baidu passengers get off here and wait for a cheaper fare on the next round? Frankly, a stock that soars from 161 to 300 in five weeks is either a) on steroids, b) from another planet, or c) supported by cultists. But really, how does a relatively teeny company not only fend off, but dominate the Chinese search engine space over King of the Warlords, Google?

I have always, and will probably continue to suspect that protectionism is alive and well in the MIddle Kingdom. Is it our responsibility to select stocks that are truly independent? Is it our business to invest (or trade) only in stocks that are on an even playing field? I say no. The rules are in place, and if you don't use them to your advantage, there will be no whining allowed later. That being said, I regret not staying in Focus Media and Sina, but not as much as I lament not being seriously long in CNOOC Ltd. and Baidu.

I figure I'm not alone. How many of us know China is a runaway train and still don't won't dip both feet in the water, let alone plunge in? Is this where BIDU pulls back 50 points? Does BIDU pause, refresh, and then run another 140 points?

There is no logic, though some may try to convince me otherwise.

CNNMoney.com/Paul R. La Monica: The Baidu bull run

Munarritz on Google's many partners

My favorite Motley Fool writer, by far, is Rick Aristotle Munarritz. His interest in growth companies near and far never ceases, which is why I never miss any of his articles. Try not to, anyway. His latest piece includes Google and Baidu.

Munarritz: Little G in Big China

He mentions SINA in the story.

So where does this leave SINA (Nasdaq: SINA)? Two months ago, SINA hooked up with Google in a revenue-sharing search-advertising deal. The Chinese portal knew that it was getting into an open relationship, but did it know that Google was interested in seeing so many other people?

As it turns out, SINA has jumped from 35 to 40 in the past few days, probably because the Co is bullish on projected revenues due to its partnership with Google. He also mentions NetEase, though I wonder how strong the Co will be with its toes in several different businesses. I like Shanda Interactive as an online gaming destination better.

Yes, B+ picks can be bargains too

Here's my shopping list for Monday, when the market could resume the Big Dipper, then turn around at mid-day.

I never cared for roller coasters, but that's what we're on for awhile. My wish list, current prices and target buy prices (highly adjustable):

[B+] China Medical Parts (CMED), now 32, target 30
[B+] CNOOC Ltd. (CEO), now 113, target 111
[B+] Darden Intl. (DAR), now 8.03, target 7.50
[B+] Flowserve (FLS), now 68, target 65
[B+] Focus Media (FMCN), now 39, target 35
[B+] Gmarket (GMKT), now 22, target 21
[B+] HDFC Bank (HDB), now 81, target 73
[B+] Intercontinental Exch. (ICE), now 153, target 140
[B+] Opsware (OPSW), sold to HPQ at 14.25
[B+] Potash Corp. (POT), now 85, target 77
[B+] Precision Castparts (PCP), now 137, target 125
[B+] Salesforce.com (CRM), now 39, target 27
[B+] SanDisk (SNDK), now 53, target 49
[B+] Sina Corp. (SINA), now 42, target 40

Dammit, where's the barf bag?

Garmin, lululemon, Perfect World, Gmarket rallying

It's early as heck (3:49 a.m. here), but it may as well be Christmas Eve. Not because a bunch of gifts are sitting under the tree.

My screen is lit with red and green lights all over. Seems like another choppy session is ahead.

Up: RIMM, AAPL, CEO, FWLT, GRMN, CROX, LULU, PWRD, GMKT.
Down: GOOG, BIDU, FSLR, AMZN, SINA.

Gmarket (GMKT), a South Korean e-commerce Co, is riding on yesterday's blowout earnings numbers. Shares reached $24.48 but have pulled back to $23.89.

Apple's bounce is no surprise now that the early-week rumormongering by media with unfounded info about iPhone and iPod production was pure crap. AAPL is up nearly a buck to $135.95. CNOOC (CEO) is bouncing back from yesterday's bond issue, up $2 to $116.75. Still a steal at 11 times earnings.

Garmin (GRMN) is kicking tail and rolling up nearly 3% to $95.26. My decision to pass on GRMN at $83 the other day is giving me the blues.

lululemon athletica (LULU) isn't acting like typical IPOs. Nearly a week since going public, the stock refuses to sink. LULU is up almost 7% to $33.20 in what has become a sexy sector. lululemon's emergence is not hurting pseudo-competitors Crocs and Under Armor one bit. In fact, Jim Cramer touted all three during a long riff yesterday on Mad Money.

Surprisingly, Perfect World (PWRD) is rallying after a few days of decline. The Chinese online gaming company went public one week ago and reached $30 before the inevitable selloff. PWRD is up $1.39 to $22.39.

Starbucks (SBUX) buyers are happy. That is, the stock buyers, not the coffee buyers, who are now paying 9 cents more for their favorite beverages. SBUX is trading at $27.50 this morning.

On the down side, Eric Bolling of Fast Money hammered FSLR yesterday, predicting a drop to $75. Bolling, of course, is a gas/oil trading specialist, so he is a bit biased.

Also down, to my chagrin, is Nintendo (NTDOY.PK). The stock is mirroring a 3.8% drop in Tokyo. The U.S. pink sheets are currently down to $56 from the high of $65 (July 26), a plunge of 14%.

Nasdaq is just barely positive (up 9 points) and the Dow Jones is up 39 points to 13,400. Just another unpredictable day ahead.

Focus Media, Sina ready to bounce?

Focus Media stock has been in a seemingly bottomless pit for a few weeks now.

Not that FMCN has hit the bottom. More like the stock tripped off a cliff and is clinging on to a stray tree root, finding its footing on a ledge. That's what life with a delayed earnings report and an impending hearing with Nasdaq will do. Since hitting a high of $50 a month ago, the advertising company plunged to $44, then rallied up to $52.

Not all was well, however. Investors lost patience as the Co did little to explain the delay other than a situation involving two letters from a short seller regarding company activity in 2005. The stock hit $40 on Friday and today, showed some resillience with a minor gain.

American Bulls has FMCN on confirmed "Buy" status after today's market. The site also has a confirmed Buy on another Chinese stock, SINA. The stock ended a down turn by rallying for a 1.4% gain to $42.39 today.

Sina, the country's top portal, is relatively active compared to volatile stocks like Baidu. Speaking of Chinese stocks, China Analyst has released its list of U.S.-listed stocks from top to bottom in gains and losses year-to-date.

At the top is Trina Solar, with a gain of 228%. In all there are 86 listed stocks. While newer companies like Baidu rank pretty high (eighth), long-established stocks like China Mobile (CHL) and Aluminum Corp. of China (ACH) are among the Top 15. The success of Chinese stocks begs the question, of course, of whether they'll survive if and when the rising inflation rate gets out of hand there.

Pupule Paul is long FMCN, SINA and BIDU.

Sohu talking a big game

Sohu rhymes with tofu and dofu, but there's nothing lacking in its potentially beefy deal with the 2008 Beijing Olympics.

The Co's CEO, Charles Zhang, has made bullish comments regarding web advertising revenues via online exclusive rights of the Games. When I delved into Chinese stocks recently, Sohu was definitely among the contenders I studied. I wound up with smallish holdings in Focus Media, Sina and Baidu, but that was before I realized Sohu got the Olympic connection.

Though other portals have formed an alliance to battle Sohu's exclusivity, it's a scenario worth exploring. Sohu broke through resistance to a new high on June 22 and hit $35 on July 16. Quite a ride since hitting a bottom of $20.94 on April 3.

When I last took a closer look at the Co, it had a market cap of $1.2 billion. Profit margins (17%) and operating margins (16%) were good. So was return on equity (16%). Quarterly revenues? Pedestrian at 8%. Price to earnings ratio is 48, but forward P/E is not bad at 28. So what's the problem? Negative earnings (-26%) and stagnant EPS. So, I rated SOHU a B-.

The Olympics could change everything for the No. 2 portal in China. As Zhang said, revenues are already picking up. That should reflect in Sohu's earnings report due August 1. The stock, on a four-day tailspin, traded up to $32 in extended hours today, perhaps feeding off Baidu 's skyrocketing move.

Exactly how "exclusive" Sohu's Olympic Games rights will be is something we've yet to see. Is Sohu worth a buy?

Though I have a little SINA, I'm not a huge believer in portals, so my humble take is that Sohu is worth watching, not entering. I still lean toward Apple and Nintendo as better buys, and in China, Baidu before all else. At least until Alibaba goes public.

Disclaimer: Pupule Paul is a wee bit long SINA, FMCN, BIDU and AAPL.

Pupule's small caps taking body blows

Has the summer slump finally arrived?

With as much certainty as a summer swell, each summer brings a period of lower volume and downtrend in the market. This time, the lull is showing up in bits and pieces even as the Dow sets a new high. Am I bitter? Aaaaaah ... not really.

I have enough faith in Crocs, Sina, Apple and Nintendo to feel comfortable. Baidu? They lead their field, and what a large field it is. Concerned about the lofty PPS? Yes, but it's a good problem. It's the weakness in my small-cap favorites that is a source of some stress.

Dendreon continues to take a beating — to a pulp — that brings Rocky Balboa to mind. You wonder when DNDN will stop taking the punches and fight back, though. DNDN is down 3.4 percent to $7.52 with an hour left in the session.

Hoku Scientific took a breather yesterday, giving back some gains on a relatively paltry 2.6 million shares. Today, with an hour left in the market, HOKU has retreated 3.4 percent to $12.95 on 3.3 million shares. HOKU is now down 11 percent since its mid-day high yesterday.

Even with this low volume, I think HOKU could possibly drop to $11.85, which would be 18 percent down from yesterday's mid-day high. The stock could also drop 23 percent from its high, as it did between June 26 ($12.80 intra-day) and June 29 ($9.84 intra-day).

A 23-percent pullback from yesterday's all-time (mid-day) high of $14.55 would bring HOKU down to $11.23.

Bears are finally smiling again as HOKU proves to be vulnerable to the whims of traders, but the lack of volume today could mean Mama and Papa Bear may be shooed out of the party real soon. The last time volume was this low — 1.8 million shares on July 5 — HOKU was up in five of its next six trading sessions on strong volume.

Disclaimer: Pupule Paul is long in the stocks mentioned in this story.

Starbucks compels, but ...

I confess, most of my down time outside of home is spent in ... uhh ... well ... Starbucks.

Aside from the hours spent stuck in traffic, Starbucks is the one place I return to at least twice a week. They're everywhere, at least here on Oahu. It's also one of the few places that'll let me plug my laptop in and hang out for an hour, two hours, even three hours. Most times I get a hot cocoa or ice tea, maybe two. I'm not a total cheapskate.

And yet, as well as I think I know the ambience, service and products of Starbucks, I've yet to buy a single share. Starbucks has grown up all right, and is approaching the weight of a Coca Cola or McDonald's. Shifting its weight around is difficult at this size, unlike smaller, younger, more nimble growth companies. So why is Georges Yared still gung ho about SBUX?

In his piece at BloggingStocks.com, Yared points to the Co's goal of expanding from 13,000 stores to 40,000. Much of that growth, of course, will be overseas. India. China. There are already many tales of how young adults in China use Starbucks as a hangout place in lieu of nightclubs and bars. The growth in China is incredibly important to the future growth of the Co, of course, and pleasing Chinese customers is key.

I don't see CEO Howard Schultz missing the boat on this opportunity. If the Chinese want more tea than coffee, so be it. The stock, though, was at an all-time high less than a year ago. Growth slowed, though, and there wasn't enough justification to consider a buy over $35, or even $30. A buy at $26 is what I thought, but didn't expect.

Today, SBUX closed at $26.08, up from a 52-week low of $25.22 on June 25. Remarkably, the P/E is 32, and I have to wonder, is this the real bottom? Maybe.

The more important question is, where will SBUX be in a year? Will growth in China show up on the bottom line really, really soon? As surely as Starbucks grows into China, so will McDonald's, and the Golden Arches promise to be as much of a foe there as they are here.

So, with respect to Yared, one of my favorite, most progressive stock writers, I'll take a pass on SBUX until some numbers come out. It's worth noting, though, that just about every growth stock I love has some kind of relationship to China. Baidu. Sina. Focus Media. Shanda Interactive. CNOOC.

But if I buy what I know, I should get SBUX. Wonder if they could set up some Crocs kiosks in the Chinese Starbucks stores. Hmmm...

Disclaimer: Pupule Paul has no position in SBUX, but is long CROX.

Crocs, Focus Media running through 40s

That was quick.

It was just a few weeks ago when Crocs split its stock, and soon after, saw it dip. In fact, in the middle of a lull — CROX is prone to sideways action from one to nearly three months every quarter — some shareholders wondered aloud if the stock had finally topped out.

Compounding the situation were a number of insider sales, which came after the Co had guided the street toward strong growth for Q2.

After bottoming out at 40, CROX has roared back. It nearly hit $50 intra-day today and closed at $48.18 on lower volume of 5 million shares. Earnings won't be out until August 2, so this recent run surprised me. I hadn't expected a run until Monday, July 23, more than a week before earnings.

Crocs took a breather today, down less than 1% to $48.18. CROX wasn't the only stock to make a strong move to the plus side.

Focus Media has come back with a vengeance. FMCN hit an all-time high (mid day) of $52.09 on June 29, only to turn back when it delayed its earnings report.

The stock dropped to $44.28 on Monday, but bounced back by the close to $47 and has been recovering steadily since. Today's close at $49.85 came on low volume (1.8 million shares), but for now, it seems the coast is clear.

Sina Corp. joined its fellow China high flyers today, gaining 1.7% to $45.05. Baidu also wound up in the green, up fractionally to $206.19.

Other high-grade stocks with nice moves today include Chipotle Mexican Grill (5.4%), HDFC Bank (4.5%), Salesforce (4.1%) and Foster Wheeler (3.6%). Amazon also made a nice move toward its all-time high, up 2.9% to $72.79.

Pupule Paul's A- grade stocks — AAPL, AMZN, BIDU, CROX, FWLT, GOOG, SPAR and RIMM — were up 1.3%.

Pupule's B+ stocks (see list at right), including Nintendo, were up 2.18%. Nintendo, garnering more exposure daily on CNBC thanks to insane demand for the Wii, was up 2.3% to $52.20.

Forbes ran a story from the E3 Conference extolling the life benefits of the Wii in a piece called Can The Wii Save Your Life?

In the morning, BusinessWeek.com ran a piece about the unveling of Nintendo's Zapper controller.

Dang, I wish I'd bought NTDOY.PK back at $36. Waah.

Disclaimer: Pupule Paul is just a teeny bit long CROX, FMCN, AAPL, BIDU and SINA.

China's fortune

For what it's worth, Fortune's David Kirkpatrick is the latest to echo the grand scale of China's free market revolution. As Jim Grisanzio points out, Kirkpatrick sees growth on steroids (my paraphrase) in the Middle Kingdom.

I'm already high on Baidu, Sina and Focus Media. CNOOC is possibly overbought, but has doubled since appearing on my radar months ago. China needs oil, pollution levels are out of hand. Makes me wonder what the pollution play will be in a year or two.

Jumping into China for the sake of jumping isn't wise, of course. But growth is growth is growth. And I feel equally bullish about Nintendo, which is one of only two Japanese stocks I like at all. If there are any others, I'd love to find out.

But back to China. Alibaba, 40% owned by Yahoo, goes public later this year. Already a sector leader. And what about Tencent, the dominant player in instant messaging? I'll have to do some digging, but a Tencent IPO might be, as the kiddies say, off the hook.

Disclaimer: Pupule Paul is long, just a teeny bit, in BIDU, FMCN and BIDU.