Watch for language from the FED relating to the U S Dollar. If they hint at a change towards a stronger dollar, we will enter ETF UDN.

We believe a FED bias towards a stronger dollar, can send this to $30, and the stock markets below their 200 day mvas. So in addition we will add more short positions.

If the event is as expected, we will not enter this trade, and continue down the road we are on, looking for under valued plays with high growth, and very limited downside.--Jon

The Nasdaq 100's spectacular performance so far this year -- last we checked, it had shot up a cool 25%, or some 448 points -- as a startling illustration of how a few exceptionally strong stocks can give the impression of a big bull move.

Of that roughly 25%, or nearly 450 points, gained by the Nasdaq 100, a whopping 230 points, or over half the index's rise, has come from just three issues: Apple (135 points), Research In Motion (60 points) and Google (35 points).

13D Original Filings

Orient-Express Hotels (OEH)

Dubai Holding, part of the business empire of the United Arab Emirates' ruling al Maktum dynasty, said it may consider making an offer to acquire the Singapore-based hotelier. Dubai Holding, which is run by Mohammad al Gargawi, the UAE minister of state for cabinet affairs, said it began acquiring Orient-Express shares in order to prevent another shareholder, Indian Hotels Co., from acquiring a significant stake in the company. Dubai Holding currently has 3,911,611 shares (9.2%).

There are a few things on this chart that are note worthy. There is a “false break” pattern in place. Changes in trend come from false break patterns or moving above an obvious old high and failing to extend the move. From the start of the sideways pattern on June first through to the last high was 180 calendar days and that is a normal time window for a top to complete. They can be 240 or 270 days but 180 has a history in this circumstance. In order to confirm a top is in place won’t take much from here. Since the high there have been two very weak rally days and a wide range day down that exhausted the short term trend. That is the indication of a fast trend down. The wide range day may have put in a temporary capitulation and a rally of 7 to 12 days can occur. If it moves down to new lows without moving up above the low of October 17 it could indicate the fast trend down is still intact.

It would be better to see a rally of 13 trading days to show a lower high or secondary high and then start down. If that occurs it would complete a distribution pattern and confirm a top was in place. Two weeks ago the bullish consensus hit an extreme so another piece of the puzzle has been put into place. Another rate drop next week could set of the last rally to set up a secondary high.

We’ve been following this chart for a few years now because my forecast said this would be the roadmap for our current bull campaign. The bull campaign started in 1942 with a high momentum trend up. The middle leg of the bull campaign was a “struggling trend” up and it finished with two exhaustive style of legs up. The last leg up was followed by a 45 day distribution pattern. The only difference between the current trend and this one, is this one retraced ½ of the leg up before it completed and our current market only retraced 3/8 of that leg. The smaller retracement indicated the current trend could be a bit stronger and the topping pattern could be a bit different. But notice the distribution before the change in trend.

Our current bull campaign has been almost exactly the same with its “pattern of trend.” It started with a high momentum trend up. The middle leg of the bull campaign was a “struggling trend” and has finished with two fast drives up. Because the correction was smaller at 3//8 the indication was the end of this trend would be a bit stronger.

I have been looking for some small amount of distribution or sideways movement before the trend changes. But it may have already taken place. Tops in this index do take some time to form and 180 days is normal. You can see the index had a 45 calendar day congestion or distribution before this last run so it is possible the distribution is complete, with only the possibility of a secondary high still to come.--Bill

I am taking down the second installment of our QID purchase tonight. My buy in price is $35.80.

The markets really have no reason to move higher, and the few tech names that are floating the boat, have moved in a parabolic fashion.

These stocks need to pull back to reality, and I believe that they will.—Jon

Futures-based exchange traded funds (ETFs) can be difficult to understand. One way to look at their creation is through the development of agriculture futures.

Before the North American futures market originated more than 150 years ago, farmers would grow their crops and then bring them to the market to sell their inventory. However, because the farmers had no indication of demand, their supplies often exceeded what was needed. Conversely, when a given commodity, such as soybeans, was out of season, it became very expensive because of lack of supply, explains Oxford Futures.

Between 1849 and 1850 "to arrive" contracts come into use for future delivery of flour, timothy seed and hay, according to the Chicago Board of Trade. Farmers could bring their commodities and sell them either for immediate delivery (spot trading) or for forward, "to arrive" delivery. The "to arrive" contracts were created to save many farmers from the loss of crops and help stabilize supply and prices in the off-season. These forwards contracts were the blueprints to today's futures contracts.

The PowerShares DB Agriculture (DBA) is a broad-based ETF that invests in futures contracts on corn, wheat, soy beans and sugar. It launched in January and follows the Deutsche Bank Liquid Commodity Index. When prices rise for these goods, so should DBA.

This ETF is designed to reflect the performance of the agricultural sector by investing equally in four futures contracts: corn, soy beans, sugar and wheat.

All four commodities have their pros and cons; however, factors such as increased demand for ethanol can help boost the prices of the entire group. (To learn more about futures, see The Barnyard Basics Of Derivatives.)

The surge in corn prices has forced farmers to plant the most corn since 1944 to meet the demand from the ethanol plants. While the conversion from foreign fossil fuels will be beneficial over the long-term for the United States, in the short-term it has propped up agriculture prices and, in turn, the food prices in our local grocery store. If corn is selling for more than 50% higher today than it was at this time last year due to ethanol demand, that same price increase will be passed along to the food companies that use corn as a base ingredient.

This is a phenomenon not only seen in corn. Because more land is being used for harvesting corn it will result in less land for other commodities such as soybeans. Year-to-date, the soybeans futures have risen nearly 25%, as lowered supply and increase demand push prices higher. Another plus for DBA and agricultural commodities is their ability to trade independent of the equity markets.

The biggest issue for investors considering purchasing DBA is the lackluster performance of the underlying index. According to PowerShares, the returns of the S&P 500 have been more than double that of the DB Agriculture Index since 1997. Maybe the tides are turning and the agriculture commodities will begin to give investors the returns they are searching for.

No matter what the mortgage market looks like, how many cars General Motors Corp. (GM) sells or doesn’t sell, or what the price of a gallon of gasoline is at the pump, people will always need to eat. Indeed, as wages rise in such places as China, India, Latin America and emerging Eastern Europe, people will be able to afford more and better food. And that bodes well for agricultural commodities.

Commodities are also a good play when financial markets are unpredictable and when inflation is expected to remain in the picture.

Another telling picture of the Ag Bull Market staying power comes from a Purdue University web page I found that is titled, “Bull market for ag grads”.

Its goes on to say, “Seventy-two percent of May graduates landed jobs by Oct. 1, with an average salary of $36,234, according to Purdue Agriculture's annual employment survey of new graduates.

Both the percentage of new graduates employed and starting average salaries are up slightly from those reported one year ago, continuing a long trend of strong job placement and pay among May agricultural graduates, says Allan Goecker, director of academic programs and associate dean of Purdue Agriculture.

"We've seen a remarkably consistent trend over the years of job placement within four months of graduation," Goecker says. "Some graduates also are choosing to continue their education."

I don’t really know how this compares to other graduate programs, but the University of Purdue seems to think its worth writing about.

Another reason for the bull market in agriculture is the growth of GDP on a worldwide basis along with increases in population. Global population should reach 7 billion by 2013 causing demand for grain to increase by 40% by that time. Along with strong population growth is the even more powerful phenomenon of a new middle class being created in emerging economies at a record pace, spurring GDP rates that are projected to rise at twice the historical average for the next ten years. Such wealth creation brings about a consumer who is able to demand a healthier, higher-protein diet, which is straining agricultural commodities producers who have to supply the livestock required to meet that end demand for meat.

The result of these three new dynamics: the conversion of bio-mass into bio-fuels, investment in agriculture as a hedge against inflation and an expanding, more wealthy global population has led to scarce supplies for soft commodities—rendering stock-to-use-ratios at record lows.

Wheat, for example, is at its lowest inventory level since 1978—currently 112 million metric tons, down 46% since 2000! And today’s demand for wheat is running at 616 million metric tons while production is estimated at just 606 metric tons for 2007; in fact, demand has outstripped supply for the last 7 years. It’s little wonder, then, that prices have doubled in the last 6 months, albeit having been pressed higher recently by weather.

Which leads to what may be the most compelling evidence behind this agriculture story: weather. Or the lack thereof. Aside from wheat in recent weeks, as mentioned above, this is perhaps the first time in modern history when the steady rise in agricultural prices has not been due to weather—a crop freeze, drought, flood, etc.—which is what has always been the driver of past price spikes in soft commodities. No, this rise has been slow and steady, the result of all the demand-side pressures listed above, which means agriculture may be in the early stages of a bull market that ends up looking a lot like the ones other raw materials have witnessed in recent years.

If you have made it all the way down to this part, then I applaud you. As I have always said, it’s the research that makes one a phenominal trader, not a chart pattern.

Honestly, I also looked for the bear case but just cant find it.

The bottom line, I don’t see any dramatic down side risk to the DBA investment, but can forsee substantial long term upside potential.—Jon

Brazil today held steady on interest rate after 18 consecutive rates decreases since 2005.

Of note a strongly hawkish inflation reading in September is what brought on the rate cutting halt.

With out stock market holding at all time highs, the dollar dropping like a stone, oil climbing $1 everyday, Its safe to say Mr. Ben will again swing back to an inflation hawk and possibly spark a stock market sell off.

This is pain medicine to those who are on crack stock needing a shot of multiple point upside moves everyday to make them look or at least feel like smart professional traders.

But the bottom line is, for the good of everyone, a dose of market reality that reflects an economy that has gone from over 10% growth to flat, with no signs of improvement over the next few quarters, a market correction of substantial magnitude is just the thing we need to keep long term gains on track.

The laws of reverting to the mean are never able to be avoided in any decade, and this decade will be no different.—Jon

Headline, “Oct 18 (Reuters) - Mattress maker Tempur Pedic International Inc (TPX.N: Quote, Profile, Research) posted a 34 percent rise in quarterly profit that was above market estimates, helped by higher retail sales and modest operating expense leverage. Tempur Pedic also raised its 2007 outlook and said it expects to earn 52 cents to 54 cents a share for the fourth quarter.”

TPX call option volume was 13xs normal today centered around the $35 strike price, which expires tomorrow.

The 35 strike cost 90cents per share, per contract, so the stock needs to get above $36.50 to be in the money by the close tomorrow.

Either way, as I have profiled before, TPX is the industry measuring stick that all other bedding makers have to live up to.

TPX is a great add to our list as the shares have gotten beaten up in conjunction with the housing problems.

I expect the shares will test the lows again at a later date, but this is a great company and we value the shares at $50 per share.—Jon

Attached you will find a 3 month chart of GROW

Remember we look for stocks that set up by being lower for 5 weeks or more, yet higher today then 30 days ago.

GROW now fits that criteria and if one believes that GOLD will climb to $1000, this is the place to be.

We value these shares at $50 per share.-Jon

It's not easy to turn a penny into $10 — or, in this case, $400,000 into $40 million — but a couple of avowed empire builders, James Wang, 45, and Marc Siegel, 47, the CEO and president, respectively, of China Direct, have done just that. Much of their success can be attributed to a rampaging Chinese stock market, which with each passing day is becoming increasingly reminiscent of Wall Street's ultra-speculative Internet craze of the late 1990s. That's when online and technology shares, sporting astronomical price-earnings in multiples of 100 or more, went through the roof before ultimately collapsing in what became one of this country's biggest investment bloodbaths.

While some pros insist a similar blowup in the Chinese market is merely a matter of time, Wall Street for now, at least, is giving China Direct the benefit of the doubt, bidding up the price of its shares more than 200% since its initial public offering in August.

The shares, 18.5 million of them, began trading on the American Stock Exchange at $4, later shooting up to a high of $12.95, and closing Friday at $9.90. The actual float is about 7.5 million shares.

China Direct, an American company incorporated in January 2005, is basically what could be called a venture capitalist firm. Focusing on natural resource companies, it buys a controlling interest in cash-constrained mid-size Chinese companies, principally in areas of the country ignored by institutional investors. It then provides them with capital and management expertise in an effort to speed up their growth.

As Mr. Siegel explains it: "Utilizing our cash and advice, we want to take the companies to the next level." Companies in which it acquires stakes are at least five years old and China Direct's goal is to raise its historical sales and earnings growth rate to 35% to 40% from 10% to 20%. At present, it has interest in four companies involved in such areas as magnesium, chemicals, zinc, and alternative energy. So far, China Direct's bottom line is humming. Last year, it earned $135,000, or two cents a share, on sales of $14 million. In this year's first six months, earnings ran $4.1 million, 27 cents a share, on sales of $71 million. For all of 2007, Mr. Siegel projects a net of $8.25 million, or 50 cents a share, on a volume of about $150 million. For next year, he projects earnings of 70 cents to 80 cents a share on sales of around $200 million.

The company, which has about $20 million in cash for expansion purposes, is in talks with a number of investment bankers to raise additional financing. It is also talking to a group of Chinese companies in which it might take new stakes, including companies engaged in oil wholesaling, solar energy, information technology, and lumber and paper.

Where does China Direct go from here? "We're looking to build a billion-dollar company," Mr. Wang says.

Whether that exalted goal has any merit or is simply another corporate pipe dream is anybody's guess, but the stock's meteoric rise has already attracted some skeptical short sellers. One skeptic said: "You're not talking about a dramatic new product, but simply another venture capital project which is as common these days in China as rice. If financing, for any reason, were to dry up, this company could go the way of the hula hoop."

Yet another danger is said to be the possibility of a big sell-off in the Chinese market, as was the case last February 27, when it tumbled 9% in one day due to excessive valuations. The Chinese market, which is rampant with 50 p/e ratios, rose 130% last year and is up more than 100% this year.

Meanwhile, early investors in China Direct have cleaned up. To date, Mr. Siegel notes, some have made anywhere from four to 12 times on their money.

Mr. Siegel, a former branch manager at Lehman Brothers, and Mr. Wang, a former professor at the University of Minnesota, have also participated in this windfall, with each owning 4 million shares — now worth nearly $40 million — at an average price of about a penny a share. "We got lucky," Mr. Siegel says. "We were in the right place at the right time."

The big question, of course: Will their luck hold? Wall Street is littered with the blood of avowed empire builders, and Wall Street warnings about overvaluations in the Chinese market grow by the day. On the other hand, some Wall Street people I respect have been telling me for more than a year that the Chinese market is an accident waiting to happen, and all it does is keep going up.

Options expiration is this Friday the 19th. Today NTES did 7xs normal call volume.

Rumors are flying on the message boards the stock is a take out target by GOOD or BIDU.

The $20 calls seems to be where the best are comfortable. This means the stock would need to be north of $21 to be in the money.

I place a value of the shares around $26.

Keep in mind, these are speculators, they may know something, then again, might not. Most of these traders will have their bets hedged in case they are wrong.

Never the less, I wanted to make you aware of the situation.—Jon

When we look to take long term positions in stocks, remember we like ones that are lower today verses 5 weeks ago first, then higher today then they were 30 days ago.

Waiting for this type of set up in good stocks can take a while, but usually gets us the floor price on the pull back having cleared out all the momentum players. Shares of HOS now fit these requirements.

We put the value of these shares between $55 and $65, and belive the stock will begin working towards that target.--Jon

If anyone has watched shares of JRJC go from $3 to $47 over the last 52weeks, and missed that move, they will be happy they stopped by this blog.

I have a potential canidate in the same business, that just got a nice investment form billionaire investor Ron Burkle, who then got his partner David Olson, who counts President Bill Clinton amoung his top advisors, appointed to the Board of Directors. Also rounding out this new Americanized Board is Larry Kramer, founder of Marketwatch, and Steve Richards, COO of Silver Pictures, who produced the Matrix movies.

I have attached an article from 2006 about this companies founder Fredy Bush. I will be taking a position in this stock on Monday. I will buy half my position, then if the stock pulls in more, will take down additional shares.

Playing the China Card

A single mom from Utah finds a way into the soul and wallet of the Middle Kingdom

Fredy Bush couldn't have known, but 1999 turned out to be a bad year for an American to start a business in China. Shortly after she founded Xinhua Finance, a financial news and information company similar to Reuters or Standard & Poor's, the dot-com bust began to mushroom, and venture capitalists suddenly snapped their wallets shut. Then Chinese fighter jets forced down a U.S. surveillance plane on Hainan Island, putting Washington and Beijing nose to nose. The Sept. 11, 2001, terrorist attacks and a worldwide recession followed soon after, and then the SARS virus turned much of Asia into a quarantine zone. "I stayed awake at night wondering if we would go bankrupt," Bush, 47, recalls. "Every macroeconomic and geopolitical event seemed to be going against us."

Her company rode out the turbulence, however, and Xinhua Finance is now poised to play a key role in the surge of foreign investment in China--and benefit handsomely from it. The kind of data it publishes--market analysis, credit ratings on hundreds of companies, stock and bond indexes--is manna to investors desperate to understand one of the world's most exciting, yet abstruse, economies. In 2005, the company's revenue grew 84 percent, to $110 million. And the growth of Xinhua Finance itself--founded not by a deep-pocketed corporation but by a single mom without a college degree--serves as a parable for American entrepreneurs seeking their fortunes in tricky foreign markets. "She's not the usual brash American businessperson," says Clifford Ng, a lawyer with Preston, Gates & Ellis in Hong Kong, which helped take Xinhua Finance public in 2004. "She's very good at building the relationship first and making people comfortable with her. Then the deal gets easy."

Few people begin their careers less likely than Bush to end up as a globetrotting deal maker. Bush was raised as a Mormon in Utah, where she was married with two kids by the time she was 19. During her first year of college, her husband died in a motorcycle accident. She migrated to California and ended up working for a woman from Taiwan, who told Bush she could make $3,000 a month working as an English-speaking assistant to a government official over there. So in 1985, she packed up her 8-year-old son and 5-year-old daughter and moved to Taipei--unaware that, among other things, the island state was under martial law.

Quick study. The job paid off, though. She worked as a clerk to the secretary general of Taiwan, responsible for helping purchase commodities like corn, soybeans, and grain. In 1988, after martial law had been lifted, the government started to privatize state-owned businesses, and markets began to open up. Bush saw a chance to apply what she had learned, starting a commodities consulting business called the Bush Corp. Meanwhile, she started studying Mandarin Chinese and the global securities markets.

With China gradually opening up--much the way Taiwan had--Bush moved to Hong Kong, then to Beijing, and finally to Shanghai. Along the way, she sent her kids to high school and college in the States, traveling to homes in San Francisco and Hawaii, where they were enrolled. She hired nannies to stay with them until they were older and "commuted" to be with them on weekends and holidays.

In the mid-1990s, Bush and her company started working with the Xinhua News Agency, the official news outlet of China's Communist government. With China eager to attract foreign money, party ministers knew they'd have to start demystifying their economy and providing more transparent financial data. Bush provided quotes and analysis to the agency much as she had to clients in Taiwan, and got to know key insiders. Business was good. She made enough money to ensure, for the first time, that she could finance good colleges for her kids.

By 1999, Bush believed strongly that China would become a member of the World Trade Organization, with a boom in foreign investment sure to follow. She approached contacts at Xinhua News Agency with a bigger plan than before, asking them to license its name and invest in a financial news service. Bush realized it was one of China's strongest brands and a powerful marketing device. "Xinhua has a name and authority and presence that's indisputable in China," she says. "If we had called the company China Finance, and it was being run by a foreign woman in China, with no partnering, I don't think it would have been successful."

The news agency ended up with a single-digit ownership stake in Xinhua Finance and control of two of nine board seats. A news agency executive, Wu Jiguang, became chairman of Xinhua Finance. Bush knew that a Chinese face atop the company would play well with her local audience. She became vice chairman and CEO. Then, to build credibility with the outside investment world, Bush recruited executives from firms such as Standard & Poor's, KPMG, Moody's, Credit Suisse, and Citigroup. She also knew it was critical that her company be perceived as independent of the Chinese government and the Communist Party. One step was forming partnerships with Lehman Bros. and the FTSE Group, publisher of London's FTSE100 index, and adopting their methodologies for measuring stocks and bonds. Bush says that not once has any Chinese authority tried to change or censor anything. "We've been watching them for two years, and we keep liking what we see," says Jared Carney of the Milken Institute, the Los Angeles-based economic research outfit, which plans to cosponsor a new set of Chinese economic indicators with Xinhua Finance.

Head start. Bush's strategy appears to be working. China's accession to the WTO in 2001 drew legions of multinational corporations to the Middle Kingdom. Yet even though it competes with big western companies like Dow Jones, Reuters, and Moody's, Xinhua Finance stands out. "We believe Xinhua's growth opportunity in China is unique," analyst Michael Gilmore of Nomura Securities wrote recently. The name is one advantage. So is the head start. With more than 1,000 employees who produce about 300 news stories and analyses each day, Xinhua Finance has a broader reach than any other company operating in China. It has an aggressive build-out plan, too. Instead of coasting on the Xinhua name, Bush is acquiring companies that specialize in related fields like investor relations and financial broadcasting--along with proprietary databases and methodologies that will enhance the company's reputation for hard data.

As for her lack of formal schooling, Bush has gathered the kind of business intelligence during two decades in Asia that grad schools and consultancies can't teach. One tip: Be nice. "In Asia, it's always about manners and politeness," she says. "In the U.S., it's more like, 'I'm doing business with you, but I'm going to say mean things about you anyway.'" Cultural insights matter too, she insists. In addition to wisdom, Bush has also found wealth in Asia. She owns more than 5 percent of Xinhua Finance, currently worth more than $40 million.

In China, of course, there are always risks, such as the threat of runaway inflation. And analysts like Gilmore point out that Xinhua Finance could become overstretched if it expands too quickly, in too many directions. But if Bush and her team put the pieces together right, they could be sitting atop an empire in a few years. There's still nowhere near enough data to satisfy investors pouring money into China, and Xinhua Finance's early lead could help form a new kind of financial powerhouse. "Think of a company with the combined power of CNBC and S&P," says Gilmore. "It would shoot competitors out of the water." Bush & Co. may soon be partying like it's 1999.

Person: Fredy Bush, 47

Position: Founder and CEO, Xinhua Finance, a Shanghai-based news and information company

Revenues: $110 million

Strategy: Partner with China's Xinhua News Agency, recruit western talent, buy other firms

Stake: Over $40 million

This story appears in the July 24, 2006 print edition of U.S. News & World Report.