What happened to the Chinese market and what I'm doing with it

I have been very bullish for the Chinese market for over a year but I was very bearish about it for a few weeks. Here is what I said early Jun: "But I’m really worried about the extremely euphoria presented in the Chinese market at the moment. To me it is almost like a huge bubble already blown up, which is on the verge of bursting up at any moment. I firmly believe that without a severe correction to kill the crazy euphoria first, it is very difficult for the Chinese stocks to go up further. " Now in the past week, it seems the reality is finally coming to the front stage. Within 2-3 days, the Chinese market crashed by 20%, directly going into the bear market. Now suddenly the panic and depression mode prevails and people are wandering about why this will happen and what are the reasons. Here are a few thoughts I have about the Chinese market:

• First of all, there is no special reason for the crash. The simple fact of the extreme euphoria and frothy stock valuation with wide-spread crazy leveraged speculating behaviors is sufficient to kill any bull market. It is not unique to the Chinese market but universally same anywhere in the world! It is just a matter of time when this moment will come.
• There are unique features associated with the Chinese stock markets: in generally investors and traders are highly immature in China and can easily be manipulated and the regulations are not yet very well established, which can be largely abused to their advantages by those who have the power and money. So it is very difficult to use the conventional technical or fundamental analysis to assess the Chinese stocks. Some unconventional gut feeling and reasoning is often more important in the decision making.
• As I said before, this bull run is driven by the Chinese government, not by the economic fundamentals. As such, it has a long way to go as long as the Central government wants to continue the bull market. After all, there is a political consequence if the bull market stops too soon. When everything is associated with the political stability, it is almost a certainty that at some point, the government will come to save it if it is on the verge of crash. In other words, there will be no end of world when the end of the world seems to come.

I once said before that this bubble like bull run may be ended with tragedy. While sounding brutal, I already predicted that we would start to see reports of suicide or jumping from the high-rises as the result of the market crash. This is usually an indicator of the bottom. Well I did see some reports last week about suicides. Technically, while not necessarily reliable for the Chinese markets, I did see an oversold condition set up. Together with what I'm thinking about the Chinese markets as above, I started to get in when it dropped 6%, more when down by 13% and further more when down by 20%. To be honest, it is a bit painful to see a sharp plummet of my positions within days but my gut tells me it is the right thing to do if I want to play with it.

A few final cautionary words to end this post: be mindful of the risk for the Chinese stocks. Don't overplay regardless how tempting it is. Always be prepared to lose everything with reasonable sizing. And always have a good exit strategy if you are wrong and use good hedge to protect if you are right. Great volatility with a wide range of fluctuations will be the norm in the Chinese markets. If you are lucky enough to have a double, better to sell half to get back your principle first and let the house money to run further. Don't be too greedy!