What To Buy: China Stocks Rip
Chinese stocks have been ripping higher over the last week as investors clamor for oversold mega bounces. Stocks like E Commerce China Dangdang Inc (NYSE:DANG) are surging again today, trading at $13.28, +1.05 (+8.59%). Just one week ago, this stock was trading under $10.00 per share. The same thing has happened to mid cap China New Borun Corp (NYSE:BORN). The stock hit a low of $3.50 in mid June and is now trading at $7.20, +1.31 (+22.24%). This is a classic 100% move higher in just weeks.
Two weeks ago the large caps China stocks started to bounce. Stocks like SINA Corporation (NASDAQ:SINA) had fallen from $147.00 to a low of $77.00. The bounce was gigantic, taking the stock from $77.00 all the way back to $114.00 today. Baidu.com, Inc. (NASDAQ:BIDU) had the same thing occur. Many of these Chinese stocks are back within reach of its 52 week highs.
The bounces in the large caps have now stalled. The money rotation has now gone to the mid caps, lead by DANG, BORN and even RENN and YOKU. The common sense money rotation states that after the mid caps, the small cap China plays will be the next mega movers. Some of these China stocks may see upwards of 100% moves. Small cap Chinese stocks trading at their lows are Biostar Pharmaceuticals, Inc. (NASDAQ:BSPM) and ZST Digital Networks, Inc. (NASDAQ:ZSTN). There are many others out there. The key is watching them closely. When they start to go, jump on board.