Climbing the Great Wall of Hesitation

Lust is a primitive thing that normally does very little in the way of positive production. But I will confess that I'm lusting for stocks have one of these denominators: 1) Oil, 2) China, 3) Killer Application.

Oil is freaking king, just like Jed from the Beverly Hillbillies used to sing. I don't know if singing the praises of CNOOC Ltd. and not getting on board before a 75% run in the past six weeks had an effect. I just know that the cost of crude oil is something I can spend less time bitching about if I just employ the old "Can't beat 'em, join 'em" approach. But as a bargain hunter, I freeze up when I see CNOOC (CEO) at $163 per share.

China was in play two years ago. China was in play one year ago. And even at the start of this year, when I really started to pay attention to the market for the first time in years, countless analysts and columnists echoed a red alert. The Chinese markets were saturated, overvalued, blah blah blah. Boy, were they wrong as heck. And then there's this. On Saturday, China takes its googlicious-level money (trillions) and will start putting it to real work.

AP: China to Launch Multibillion-Dollar Investment Fund on Saturday

Yup, forget the manini yields of treasuries. China is going to flood markets around the world with their happy money. No takeover attempts. Just getting a better return. Good news for financials? How good? How deep will they dip into non-political stocks? This is gonna be a helluva thing to observe, especially since the U.S. put up such a fight when CNOOC tried to buy some U.S. oil interest a year ago.

Conversely, it's hard to find a bargain among the Chinese ADRs at this point. James Altucher has his Chinese Rockets series of portfolios, but more recently, he lists a bunch of penny stocks in Portfolio III. Penny stocks.

Altucher: Chinese Rocket Stocks Part III

One of his criteria is that these Chinese companies absolutely must have a trong balance sheet. Major cash flow. But I'm not so big on one of his picks, NetEase (NTES). It's a good company with its toes in four different sectors, including online gaming. I prefer Shanda Interactive (SNDA), which is focused in online gaming and will emerge as one of the best in that area.

He also touts Solarfun Power (SOLF).

Last week, Solarfun announced that it has secured three multiyear framework commitments, which should consistently drive earnings for some time. It also announced that it signed its first non-domestic, long-term supply agreement (which starts in 2008).

Worth taking a much closer look. I'm almost devoid of Chinese stocks, which makes me almost heretical considering how much I actually like them. I just get wary unless they're brest of breed, and with the Chinese stock leaders at nosebleed levels, finding the kings is tough in the middle of a stampede. The hunt will now commence with discipline. Fundamentals. Technicals. Lust takes a back seat.