AREX made a new 6+ year low weekly close, below the one seen in December at 5.16. The stock closed on the lows of the week and further downside below last week’s low at 4.97 is likely to be seen this week. The stock has now had red weekly closes on 10 out of the last 11 weeks and there seems to be no end, chart-wise or fundamentally, to the weakness being seen. The all-time low weekly close is at 4.64 and the probabilities are high that level will be seen this week. On an intra-week basis though, the intra-week low seen in December was at 4.28 and it does seem unlikely that level will be broken at this time, meaning that consideration can be given to purchases of the stock around the 4.64 level with a stop loss at 4.18. If that support level holds up, the chart suggest a rally up to the $10 could be seen in the coming months. It should be mentioned that 3 weeks ago the weekly volume dropped under 300,000 for the first time in 9-months and was the lowest since June 2014 when it got down to 209,000. In November when the stock got down to 4.28, the volume had also been dropping and just 3 weeks before the 18-week uptrend to 9.57 began, the volume dropped down to 389.000 (which had been a 5-month low since June). It should be mentioned that just 3 weeks ago the volume dropped down to 289,000, and if past volume history is any indication, it could mean that a turn to the upside might be right around the corner.
I purchased additional shares at 45.31. I am now averaged long at 43.92 (2 mentions).
Stop loss on the positions purchased today is at 44.08. Objective is 51.50 so I am risking $123 to pick up $619, which is a 5-1 risk/reward ratio.
SINA generated further downside this past week as the sell-off/correction from the recent highs at 61.25 reached 32%. The stock did close the original breakaway gap at 41.90 that was created the day it was announced that the CEO was buying $465 million of the common stock, meaning the gains seen because of the CEO purchase have been erased. Nonetheless, a strong short-covering rally was seen immediately thereafter, causing the stock to rally up to the psychological and previous intra-week high resistance at $50 before settling down to close slightly in the lower half of the week's trading range.
The future direction is likely to depend on what the Asian markets do now (after their major fall), but the stock has reached a level of support between 40.44 and 41.90 that is likely to hold up. The stock did close near the lows of the day on Friday and further downside below Friday's low at 45.25 is likely to be seen on Monday, probably with the objective of closing the gap that was created on Wednesday at 45.02. Support is likely to be found between 44.18 and 45.02 and a rally back up to the $50 level (probably up to the 51.70-52.77 level) is likely to be seen.
Really Stupid eh?
First of all, I am trading with a stop loss and only risking $228 per 100 shares, so even if that amount is lost it is no big deal.
Nonetheless, the price area was chosen specifically off of charts, meaning that what is happening fundamentally in China is not as much of a concern as you might think, since professional traders usually trade without fear or greed but off of charts. As you can see, the Chinese market fell 1000 points yesterday and closed 688 points lower and yet the only thing that happened this morning to SINA is a drop down to 41.92, which is something I had predicted anyhow (read buy comment from yesterday).
Personally, I believe that trading emotionally and off of news is stupid as you will never be "ahead" or the game but only chasing it. Worse place to be. You need to have vision and not just be reactive.
I purchased SINA at 42.53. Stop loss is at 40.25 and objective is 52.77. I am risking $228 to pick up $1024, which is almost a 5-1 risk/reward ratio.
The chart shows minor to decent intra-week support at 43.12, at 42.40, at 41.25 and lastly at 40.44 (which is broken would totally negate the rally up to the 61.25 level.
On a "weekly closing basis" (Friday), support is found at 44.55, at 43.70 (which is considered the breakout point), at 41.92 and at 40.73. The support most probable to hold up is at 43.70 but the support at 41.92 is decent to strong and should not get broken. As such, buying the stock in this area makes a lot of "chart sense". I doubt that the stock will get much (if any) below 41.92.
Covered my short positions today at 47.04. Profit of $1353 per 100 shares of each mention, which means double that figure since I shorted the stock twice with an average price of 60.57.
SINA generated another red weekly close as well as closing in the lower half of the week’s trading range, suggesting further downside below last week’s low at 51.55 will be seen this week. More importantly, the bulls failed to hold up a minor weekly close support at 54.48, which in turn suggests that at least the weekly close breakout area at 50.70 will be visited. Nonetheless, on a weekly closing basis, there is no previous “low weekly close” support until 48.48 is reached. Minor but evident intra-week support is found at 51.26 that if it holds could turn the stock around as the downside objective of the mention was the 50.70-51.26 level. Likely short-term pivotal resistance is found at 54.90. Probabilities favor the bears this week. I will be considering covering the shorts after I see the action as the stock nears the $50 level.
FSLR generated another strong drop in price as well as a close on the lows of the week, suggesting further downside below last week’s low at 45.14 will be seen this week. Nonetheless, the stock is now very close to the 200-week MA, currently at 44.90, and if the bulls can turn the stock around and close in the green next Friday, Thursday’s weekly close at 45.17 will become a successful retest of the important long-term MA line, which does keep the stock in a long-term uptrend in spite of the recent weakness. Minor to perhaps decent but definitely pivotal intra-week support is found at 44.62 that if broken would be another negative, and perhaps of consequence. Nonetheless, any break below 45.00 but above 44.70 is an opportunity to buy with a small risk factor (stop loss at 44.25) and a decently high probability rating. Minor intra-week resistance is now found at 48.62 as well as at the gap area between 49.17 and 49.65 but the probabilities strongly favor the stock testing that gap sometime in the next 2 weeks. Probabilities favor the bulls this week in spite of the weak close on Thursday. I continue to believe the stock will be in a trading range between $47 and $53 for several months after this last drop is over.
AREX bulls were unable to build on the green weekly close the previous week as the stock broke most of the near-by supports to close on the lows of the week, suggesting further downside below last week’s low at 6.06 will be seen this week. The chart action has now turned decisively bearish, with the stock having dropped 33% over the past 12 weeks without any buying interest of consequence being shown. Nonetheless, since the stock started trading back in November 2007 (395 weeks), there have only been 5 weekly closes (1.2%) below 6.09, meaning that on a weekly closing basis, the bears are not likely to be successful for very long even if the stock continues lower. On an intra-week basis, the previous 2 lows over the past 8 years have been at 3.20 (March 2009) and 4.28 (December 2014), meaning the stock could head down intra-week to those levels if it continues below 6.00.
Question for those on this board:
What has happened fundamentally in the last 12 weeks to cause this stock to take this fall that has now made the chart look bearish, whereas previously it was looking bullish?
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.