Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Chinese advertising specialist China MediaExpress (Nasdaq: CCME) rallied 19% in intraday trading Friday after denying recent allegations of fraud and announcing its December 2010 contract with Eading Group, one of Apple's official ad distributors in China.

So what: Unfortunately for management, its release late Thursday hasn't completely undone the damage caused by the string of negative reports from Citron, Bronte Capital, and, most recently, from the Rino International-exposing Muddy Waters. Even with today's big bounce, the shares are down more than 35% over the past five trading days on surging volume.

Now what: Management said it would issue a more detailed response in the next few days, but I'd prefer to stay permanently on the sidelines. While China MediaExpress's forward P/E of 4.5 is tempting, there's just too much risk surrounding the business and reverse-mergers, as a whole, for average Fools to mess around with. Of course, for less risk-averse investors willing to do a lot of homework, you'll be hard-pressed to find a more potentially explosive situation.

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