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Despite looking amazingly cheap, it is difficult to be a small cap Chinese stock at this moment. Not only is the mother country's stock market taking a hammering for months on end, Chinese small caps are not part of the HFT EFT "risk on" "risk off" universe so they seem mostly in the hands of the retail investor who for the most part has abandoned the stock market, or only plays when the market is straight up 3-4 months in a row. Put another way, these names are out of favor.

While a cyclical semiconductor stock, Spreadtrum Communications (SPRD) now trades below 10x 2010 estimates. That said, it doesn't matter right now, and after giving this one a lot of leeway I am worried about the chart set up further breaking down. If the S&P 500 breaks 1070 or 1040 and starts a new sell-off this one could be headed to that green line (200-day) right quick. Hence, I am going to close the 0.8% exposure in the name but keep it on my radar. It might be one that pops strongly on earnings in the future. (Click to enlarge)

[May 27, 2010: Bookkeeping - Beginning Spreadtrum Communications]

Disclosure: No position

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Source: Why I'm Getting Out of Spreadtrum Communications