Trades!

Buy 1% position FXI Jan '12 30 puts @ $2.53.

China's chances of reflating its housing bubble are slim, in my opinion. According to some reports, construction is 50% of Chinese GDP. The Chinese government will just print to extend the bad debts, of course. But Michael Pettis says that the Chinese consumer is the one who really pays. If Chinese consumption drops (along with the developed world) commodity demand will plunge. The yuan has a good chance of dropping, which would put tons of pressure on FXI. This purchase also extends my portfolio maturity considerably.

I am also watching DIG and USO for shorting opportunities.

I've also decided to do some bargain hunting bottom fishing:

Buy 10% DJSP @ $4.75.

DJSP is a play on foreclosure activity in Florida. They've cornered the market and 80% of their revenue is tied to David Stern's law firm. It's basically his way of monetizing his share of the law firm by spinning off and publically listing the non-legal administration of foreclosure services to banks and lenders. I have no idea if banks and GSE's will finally start to step up foreclosure activity. However, the price is right. EBITDA is 95% of market cap. How cheap is that? Unbelievable. In addition, there's a huge short interest against the stock. Lawsuit liability? Maybe, but the company is a cash cow, and I expect the housing market to resume its price plunge by the end of the year.

Buy 10% GAP @ $2.71.

Great Atlantic and Pacific Tea Company fell over 30% last Friday as the company announced dismal earnings and its second CEO change in 6 months. Now it's either dirt cheap, or worthless. But people need groceries, and if any cash flow can be squeezed out of revenue, then this could be another recovery story. In addition, there's an enormous short interest on the shares. Another promising sign is that the price fell on 10X average volume. Most likely reason is that a huge institutional investor just threw in the towel. The price could take a nice bounce as shorts take their profits.