Here’s a look at the intraday chart of the Shanghai Composite Index over the last five days. You can see the dramatic gap down on the morning of the 30th following the news of a higher stamp tax. The trend has clearly flipped down on the smaller time frames and short-term traders would be looking to short the intraday rallies. It’s impossible to go short in China, but you know what I mean.

Here’s bellwether CITIC Securities’ intraday stock chart following the break. Any day trader would be stalking this doggy from the short side — you’ve gotta assume there are a ton of people trapped long above 55 and they’re scared.

Related: CITIC Securities and the Manic Manicurists

Still catching up on my WallStrip interviews… an excerpt from this one with Tim Wolters, CTO of Collective Intellect:

“We funnel people into what we call ‘topic nets,’ and topic nets are neighborhoods of individuals that talk about certain topics. So we’re able to assess over time what the credibility of sources are based on the past information they’ve posted about those topics, and then we create sort of a probability distribution model about how likely is this new post by this person to be really good on this topic so you should pay attention to it.”

Sounds fascinating but I’m not sure if it works; I’d need to see it in action.

A friend of mine is moving back to the States and my wife forced me to buy his car. The last thing I want to have in the big city is a car, but my wife thinks it will be useful for day trips to the countryside on the weekend, and as always She Must Be Obeyed.

Transferring the car from his name to my name took about five hours of our time. We first had to go to the used car market (exit 18 off the South Fourth Ring Road) to get the car “inspected” (they checked the VIN and declared the car in perfect mechanical order after eyeballing it) and pay off any outstanding fines. This is where things got interesting.

The computer said the car had three violations (two speeding and one running a light), all captured by one of Beijing’s 85,000 traffic cameras, which meant RMB400 (~$50) in fines had to be paid and seven “points” had to be deducted before the transfer could move forward.

My friend doesn’t have a Chinese driver’s license but he brought along his ex-wife’s — she was the one responsible for these infractions in the first place — and we said, fine, here’s the money and deduct the points from her license. Not so fast, big nose: it’s not the license that matters but the accompanying “points card,” and that was missing.

Just at this time a kid with a buzz-cut, wearing a thick gold necklace, matching gold ring and truly tasteless Bermuda shorts sidled up to us.

“May I be of assistance, dear sirs?” (I’m taking some liberty with the translation.)

“Yes, kind young man, how much time will it take to solve our current dilemma and what is your approximate remuneration?”

“I will make one phone call and within ten minutes your fines and points will magically disappear for the low, low price of only RMB750 ($98).” (He called it his “processing fee” which I thought was a nice touch.)

Since both my friend and I first came to China in the early 1990s and therefore qualify as old hands, we said instantly and in unison, “Deal!”

And badabing badaboom, it was done.

Given my recent tooth trouble and the excellent comments to this post, I decided to get a toothbrush/waterpik combo. The only one available locally was the “Oral-B Oxyjet Center,” which I bought for around RMB1500 (US$195). Seems expensive until you realize that it’s less than half of one payment my dentist makes monthly on his Mercedes. (Typically you’ll pay a 50-150% premium over US retail for certain things in China — in this case I paid about a 70% premium.)

Anyway, I always considered myself a good flosser and brusher, I always thought I was doing a pretty thorough job cleaning out the old mouth. But you’d be amazed at how much stuff comes out of the nooks and crannies when using the waterpik. It’s like a cascade of tiny bits and pieces falling into the sink. I call to my wife while pointing into the sink: honey, come quick and look at this! I’m not saying this to be gross; it’s my way of persuading you to get a waterpik.

Selected excerpts from the World Bank’s recently released China Quarterly Update:

Although there appears to be some loan financing of share transactions taking place, the bulk of funds entering the market are being channeled out of bank deposits.

The impact [of a stock market crash] on the real economy via reduced consumption and investment is likely to remain limited. Because of the still modest exposure to equities, wealth and balance sheet effects that could drive domestic demand downwards are likely to be limited.

The exposure of the banking system to the stock market, directly or indirectly, seems limited: although there are no good data on this, CASS estimated that the exposure may add up to RMB 300 billion, which is a modest 1 percent of the total deposit base and 5.5 percent of stock market capitalization of tradable shares.

The authorities need to continue to act decisively and transparently against illegal market activity, including insider trading, price manipulation, and provision of false information.

But if they cleaned up “insider trading, price manipulation, and provision of false information,” they would effectively shut down the markets here. ;-)

(There’s also a section at the end of the report on the “Underpricing of IPOs” that’s worth reading.)

A weak kind of mixed morning which led into some more serious chop around noon — the buyers only stepped in around 2 PM and took it up into the close. One of those days where the end of day picture doesn’t tell the real story.

Notable New Lows: JDS Uniphase (JDSU), Interactive Brokers (IBKR), and Solarfun Power (SOLF).

There are tons of Notable New Highs so I’ll just single out a few favorites: Deckers (DECK), Crocs (CROX), Southern Union (SUG), Novatel Wireless (NVTL), Apache (APA), Boeing (BA) — nice to see it over the century mark (nicer to have bought it just after 9/11), Caterpillar (CAT), Schwab (SCHW), Apple (AAPL).

Liquid ETFs making new highs: Consumer Staples (XLP), Basic Materials (XLB), Industrials (XLI), Mexico (EWW), Telecom Services (IYZ), and Water (PHO).

Novacea (NOVC) was the stock du jour doing about 400 times average volume. It has a 7 million share float and volume traded was over 21 million shares. ;-) After doubling in 45 minutes, the stock then suffered erectile dysfunction and Dummies lost a few bucks.

Kind of a long, strange, semi-honest, soul-searching piece from Jim Cramer:

“For the people who still can’t stand me, anything I do, or what I claim to stand for, I can offer only one thing. Despite the fact that wherever I go I get asked for my autograph, and if I stop for too long I end up getting my picture taken with a dozen strangers, I remain completely and utterly repulsive to myself.”

Odd, no? I’ve always liked Cramer — he’s smart and he writes well, but I wouldn’t watch Mad Money even if I could. I think reading and quiet, solitary reflection are the best ways to come up with good investment ideas.

(Were Cramer (in 1974) and John Belushi separated at birth?)

They’ve changed the interface at Paradise Poker: this rattled me. They’ve eliminated the virtual booze and cigarettes: this annoyed me. I also can’t find any “Quickie” games — maybe they got rid of them? This means that a tournament takes quite awhile to finish, so I’m probably going to play a lot less than I used to: I can spare an hour from time to time but not three hours.

Click to enlarge

Decent day of buying with a little wiggle in the early afternoon.

Notable New Lows: JDS Uniphase (JDSU), Conexant (CNXT), McClatchy (MNI), and Fuwei Films (FFHL).

Notable New Highs: Avaya (AV), Verizon (VZ), Freeport McMoRan (FCX), Fiserv (FISV), Radio Shack (RSH), Vodafone (VOD), and Guitar Center (GTRC).

Avaya was the stock du jour.

It’s important that your trading alerts have positive sounds attached, even if they’re to alert you that you’ve just lost money. Whenever a stop is hit I hear one of these three sounds. The tighter the stop, the louder the accolades. ;-)

Stop Alert 1 - Tight
Stop Alert 2 - Tighter
Stop Alert 3 - Tightest

(Right click to save to your own computer.)

The worst thing you can do is have alerts that sound like this one:

Buzzer Alert