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Tuesday's Trades Amid Two Flashing Red Flags




After markets continued their euphoric advance yesterday with more advancing than declining, two red flags are emerging.

First, Archer-Daniels-Midland (ADM) plunged by 24.2% after the company put its Chief Financial Officer, Vikram Luthar on administrative leave. The firm has an investigation into certain accounting practices and procedures regarding the firm’s nutrition segment.

ADM stock is a trade for bears despite the short interest at only 1.01%.

Monday’s over 2% drop in China’s Hang Seng Index (Hong Kong markets) is the second red flag. China’s state-owned banks acted aggressively to support the country’s currency, the yuan. It is tightening liquidity in the offshore foreign exchange market. In addition, it is actively selling U.S. dollars onshore. Traders may bet on the strength of the U.S. dollar by watching DXY. Invesco DB US Dollar Index Bullish Fund ETF (UUP) tracks the U.S. currency.

The world is slowly recognizing that China’s economy is not recovering. Chinese online retail firms will continue to face pressure. Bearish trades to consider include Alibaba (BABA), JD.com (JD), and PDD Holdings (PDD). PDD’s Temu could face U.S. restrictions if the trade war intensifies.

Bilibli (BILI), a video content site, and iQiyi (IQ), a subscription video-on-demand firm, are also stocks to avoid today. China’s Google, Baidu (BIDU), risks trading at below $100 and testing new multi-year lows in the coming days.



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