China Market crashes overnight.

Chinese market crahed overnight with Shanghai index falling by near 9% overnight.

(see http://finance.yahoo.com...)

This sharp sell-off triggered the worldwide sell-off including loss that you are seeing currently in the US market. Just about every stocks that I am following is showing signs of red. It may be possible that this sharp market correction in China stocks is finally triggering the correction that we were waiting for in the US.

I expect first sharp fall in the Chinese bluechip names and we may see additional speculation fizzle out with smaller speculative names. So the corrective period may not be over in China. We are currently covering CTRP and FMCN with china names. They are both medium risk consumer&media related stocks. I see them recovering quickly after the correction. I am continuing to recommend CTRP below $60 level and FMCN below $80. Watch these two stocks carefully because we will get a great chance to buy these names cheaper. FMCN just delivered nice results and guided the 07 estimates higher. I will provide more detailed analysis tonight.

Implication of Chinese stock market correction could lead to slowdown in Chinese economy (depending on severity of market correction). Ironically, this could help with easing the energy and commodity prices as a result of reduced demand. Also in the long run, this can help Chinese financial market to avoid serious prolonged downturn as it had attained the state of speculation and bubble in recent times.

I expect commodity and energy names to be weak in the US. Also brokerage names such as GS could see selling pressure due to its exposure in Chinese financial market. I anticipate that Chinese market correction is indeed a correction and we will get a great chance to add quality names at a cheaper price.

The current stocks in that I cover are: Filthy Rich Tech ideas (comprised of Openwave, Avid Technology, Tivo, IBM, and Research in Motion), Filthy Rich Biotech ideas (comprised of Amgen, Celgene, Genzyme, Isis pharmaceuticals, Alnylam pharmaceutical, and Protein Design Lab), Filthy Rich Financial ideas (JP Morgan and Goldman Sachs), Filthy Rich China ideas (Focus Media Holding and Ctrip.com), Filthy Rich Transportation ideas ( American Airline and Southwest Airline), and Filthy Rich Specialty Retail ideas (Peet's coffee)

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