Risk aversion has re-entered the investment equation with risky assets such as equities and commodities bearing the brunt of the selling orders, while gold bullion, government bonds, the US dollar and the yen are attracting safe-haven money.

The global stock market pullback seems to be gathering momentum with three markets on my radar screen now trading below their 50-day moving averages, indicating a reversal of the secondary trend. These markets are China, Hong Kong and Chile, with most others uncomfortably close to this intermediate support level (see table below). I am of the opinion that more markets will fall below the 50-day lines and that we will at least see some degree of reversion to the key 200-day moving averages (often used to distinguish between primary bull and bear markets). The table provides the key levels, as well as the declines since the recent highs.

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China Yongxin Pharmaceuticals, Inc. is probably the most undervalued company we’ve ever written about. It isn’t everyday that you find a growing, profitable company with nearly 100 stores trading for such a discounted stock price.

The company is more than just a drug retailer as they also produce and distribute pharmaceutical products. The company’s products include Chinese traditional medicines, chemical pharmaceutical preparations, natural health products, healthy food, cosmetics, and medical equipment.

Just last month the company released its financial results for Q3 2008 which revealed that net income doubled year-over-year to $1.7 million, or $0.05 per diluted share. However, even with consistent growth and excellent expenditure management, the stock is trading at a P/E ratio of less than one! If the stock was trading at its peers’ P/E ratio, it would be over $2 a share.

According to a CEO letter released earlier this year, the company is preparing to take its