A rolling selloff that started in Asia, primarily in China hit the US markets today. The Chinese led selloff is a reflection of a tightening in lending but is also ignoring the improving economic conditions in the US. Regardless, selloffs and corrections are normal part of market activity as the pace of the Chinese market and US traded Chinese stocks was spectacular. In particular RINO has witnessed a drop from $17 to just under $11 all in less than a week. At $11 a share RINO now sells for just 5x 2010 earnings. I do not believe its pie in the sky to assume at some point RINO will sell for 10x eps which is modest considering its 20%+ growth rate.
At present, my best guess is this will be a short term pullback that will not amount to a major selloff. Credit spreads are not widening to a serious degree and today American Express and Citigroup released positve trust data.
Trading wise, I’ve sitting mostly on my hands waiting for the selling to abate. Cash raised in recent weeks gives us some options. RINO is looking interesting once more as it climbs back to the top of my proprietary model and is now touching the 60 day ma.
Be Careful Out There
Long RINO