Do not touch when hot

It's preposterous if you're out and prosperous if you're in. Chinese stocks are on fire, partly because of the slowing U.S. economy, as well as the insatiable appetites of traders who can't resists the lure of the Middle Kingdom.

In a way, I can't blame them. So much growth is ahead in China, and the protectionist government is something to behold. They even banned Boeing from selling planes to Chinese companies, which is a just one reason why China's airline stocks are among the very best performers year-to-date.

With tomorrow's Fed meeting ahead, Baidu is on fire. But so is Focus Media, an advertising company that ran into trouble a few months back and still hasn't reported Q2 earnings. The ADRs slumped to 35, but have gained ground recently and traded at 46 today. Would this ever happen with an American stock? Up 30% on a two-month earnings delay?

Preposterous, but if you own FMCN, you're smiling.

The ultimate "safe" stock in the current environment has to be CNOOC Ltd. (CEO), my favorite oil and natural gas Co in the world. How much safer can a growth stock get? Oil hit a new mark today (well over $80 per barrel). The Co is based in China, but exploring off shore in places like Indonesia. Put the ingredients together and it's easy to see how the ADRs went from a low of 92 (August 16) to today's 133.

I pounded the table hard, hard, hard for CEO when it traded below its 13- and 50-day MA. And yet, I didn't buy a share. If and when oil prices drop, I'll be watching the chart closely again. Of all Chinese stocks, I tend to think that the government's protectionism applies more so to oil companies than any other given the geopolitical climate. The U.S. owes China, China owns the U.S. indirectly thanks to our consumer spending addiction, and the Chinese will sell their oil to anyone, regardless of politics.

I still won't buy any China ADRs unless the technicals are sound and/or there is a compelling catalyst. Watching is best here.