Chinese Stock Market

These days, the consensus that I've been hearing on China's Stock Market is that it is bubbling. I tend to agree, but I also believe that it'll continue rising beyond reasonable expectations.

On the chart above, you'll see that FXI (ETF for China's Market) has had a superb run up from the August lows, nearly doubling in a couple months. However, I think this is Wave3 out of a 5-wave bullish run that began in March, 2007. The recent correction has occured in 3-waves, ending near Subwave4 of Wave3, which also happens to be the 38.2% retracement level for Wave3. The reason I'm confident that today is the end of the correction is that there was a hammer reversal candle accompanied by near-record volume. This means that buyers stepped in strongly on today's swoon, bringing the closing price back near the open.
I am trading this by selling a 180/185 Dec Put spread. As long as FXI closes above 185 by Dec. expiration, I will earn about $2.50/contract. Should it close below, I'll lose $2.50/contract.

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