AREX generated a positive reversal, having made a new 12-week low but then closing in the green. The green close breaks a streak of 7-red weekly closes in a row and does make the previous week’s close at 6.59 into a successful retest of the previous low weekly close at 6.48, seen in March. In addition, the green weekly close keeps the 7-month uptrend intact, suggesting that the stock should go up to retest the resistance at 9.15 or the 8-month high at 9.57. The bulls need to make sure though, that the positive reversal week is confirmed with another green close next Friday. Minor intra-day resistance is found at 6.91 that if broken would suggest at least a run to the next minor resistance at 7.59. Intra-week support is now important and pivotal at last week’s low at 6.38. Probabilities now slightly favor the bulls.
"buy shares at $41 and create the illusion that there will be a buyout offer for SINA".
Sorry, but I don't think anyone would ever spend $480 million to create an "illusion". Not even David Copperfield would throw away that kind of money to generate an illusion. He would never make his money back doing that, not even if the illusion was successful. Then again, maybe you know HOW Copperfield does his illusions as you seem to think this is one.
The stock can easily fall down to $50, and perhaps even $45, but the probabilities are astronomically high that the stock would fall to $32 as that would make the CEO the most stupid person on earth. My vote is on you as being the stupid person for even thinking that.
SINA has "minor" weekly close support at 54.48 but the chart suggests that support will not hold up and that the stock will head down to the previous 14-month high weekly close at 50.70.
My Weekend Newsletter Comment on FCEL
FCEL made a new 26-month low on Friday, having broken below the low seen in January at 1.05. The stock closed on the lows of the week and further downside below last week's low at 1.03 is expected to be seen. The company has not shown any growth pattern of late and continues to offer downward revisions to the previous earnings reports, suggesting there is little reason to be a fundamental buyer at this time. The break below 1.05 does suggest that not only will the stock test the 1.00 level but if broken, the stock could return to test the multi-year lows between .75 and .80 cents. Intra-week support is found at .92 cents and it should be mentioned that in March-May 2012 the stock dropped from 1.95 to .92 cents but then bounced up to 1.39 before resuming its downward drift. The same scenario could occur on this occasion. Nonetheless, the break of the support at 1.05 does put the stock in the category of "stocks unlikely to rally any time soon and should be put on the list of stocks to consider taking the loss".
Or foolish. Trying to squeeze the last drop out of the jar often causes you to drop the jar and break it. It isn't worth it!
I added shorts today at 60.95. I am now averaged short at 60.57 (2 mentions).
Stop loss is at 61.86 and objective remains the $45-$50 level, meaning that I am risking around $120 per 100 shares to pick up anywhere from $1186-1686. It is a 10-risk/reward ratio based on charts (support/resistance levels).
Such trades with a decent probability rating (due to the clearly defined resistance level between 58.00 and 61.75, suggests this is a must-do-trade even if it turns out to be a loser. Rarely at 10-1 or better risk/reward ratios found that actually have a decent probability rating. If just 1 out of 10 of these types of trades work out, it turns out to be a profit.
As far as the action today is concerned, the stock has/had a "general" support level ($3 below any even price such as $60 is called general support) and the stock got down to 57.13 yesterday. As such, today's bounce had to be expected, at least from a chart traders point of view.
Nonetheless, if the bulls fail to break resistance now, the bulls will be disappointed and the mini correction seen will turn out to be a stronger correction thereafter. As such, today, tomorrow and Friday are all going to be pivotal days. It is likely that within the next 3 days this short trade will be determined as profitable or a losing trade.
Per my newsletter mention, I shorted SINA today at 60.19. I am using a stop loss at 61.85 and have a $45-$50 downside objective. I am risking $166 to pick up anywhere from $1019 to $1519 per 100 shares, which is at least a 6-1 risk/reward ratio.
I could have waited until next week to short the stock since the close near the highs of the week suggests further upside above this week's high (so far 60.25) will be seen next week. Nonetheless, the indexes are under sell pressure and if the close in the lower half of the week's trading range it could suggest that next week there will be weakness. In addition, the $60 is also decent psychological resistance, meaning that waiting until next week to get a few points better than I did today, could be a "missing the trade" mistake.
As such, I am now short the stock!
SINA Friday Closing Price – 56.08
SINA is a Chinese company servicing the online media needs of the Chinese (much like YHOO and GOOG does in the U.S. and worldwide). Due to a few blunders as well as some government regulations that directly affected the company, the stock had gotten into a strong downtrend that started in October 2013 at a price of 92.83 and that reached a low of 31.92 just 10 weeks ago.
Nonetheless, SINA reported positive investment gains as well a slightly better outlook for 2015 on its April earnings report and some short covering (as well as some speculative buying) was seen within the next couple of weeks, taking the stock up to and above the previous high for 8 months at 42.25.
The rally, which topped out at 44.87, began to fade as SINA seemed to be on its way back to test the breakout level when it was announced on June 1st that the CEO of the company had purchased $465 million of stock in cash at a price of $41.49 and that news caused an additional flurry of buying and short-covering, taking the stock up to a high of 56.99 seen last week.
The purchase of the stock by the CEO is certainly a strong statement of belief in the future of the company but it must be stated that the outlook for the company for 2015, as stated by the company itself, is at best mediocre and as such the present prices are not likely to represent the true value of the company, especially after jumping up almost double in price over a 10-week period of time.
Chart-wise, SINA is reaching the 200-week MA, currently at 58.50, which is a line that has been pivotal support and resistance for the stock since 2012. In 2013 when the stock was trading below the line, the line was tested successfully on 4 occasions (at 58.77, at 59.60, at 60.81 and at 61.74), suggesting that without some strong earnings figures, the line is likely to be difficult to break at this time.
Continued on next post........
Sorry for the lack of comments since my last post but I am still long AREX with an average price of 6.01. Below is my comment this week to my subscribers regarding the stock:
AREX came within a “cat’s whisker” of generating another strong buy signal on the weekly closing chart, having closed just 13 points below the high weekly close for the past 18 weeks at 8.15. Nonetheless, the traders likely decided to wait to see what the market ends up doing this pivotal week before committing to higher prices. The stock did close in the middle of the week’s trading range, leaving the door open for either direction to be chosen. By the same token, the bulls do have a decent edge, having broken convincingly above the 100-day MA (first time since August) and building what seems to be a bullish flag formation (flagpole being the rally from 6.23-8.70 and the flag being the trading range between 7.61 and 8.70 seen the last 4 days of the week) that offers a 10.08 upside objective if 8.70 is broken. Probabilities favor the stock trading between 7.70 and 8.30 for the first few days of the week and then the traders deciding on the next direction. Probabilities favor the bulls.