Renren blew through our stops…but how about another Chinese stock? (January 08, 2013)
RENN SOHU
Good evening Dan Fitzpatrick here at StockMarketMentor.com and OptionMarketMentor.com on Tuesday, January 8th. I want to look at Renren ( $RENN Renren Inc ) and then we’re going to look at something else. Remember the last few days I was talking about this, and noting that for the first time, this was yesterday, the stock closed near the middle to kind of the lower end of the range, and after a run like this what that really signified was an intraday reversal and it was really time to take profits or at least lock them in with a stop. It’s closed to many days up above the upper Bollinger Band, the stocks just not going to do that. So today we got a pull back, a pretty significant pullback and this is why you want to use stops; because even if you had set your stop a little bit below the low here, $3.74, on a percentage basis, you know, you’re still getting out below $3.62. Now it doesn’t sound like much, but we’re talking percentage here. This is a goofy $3.00 stock, okay? It’s a total speculative thing, it’s a chart basically, that’s what it is, it’s a chart. The bottom line is, at this point, I would want to wait and see this stock pull back and find some kind of support right around here, and maybe it’s worth giving it another go, but for now, you know, that’s the trade. Now let’s look at another one, Sohu ( $SOHU Sohu.com Inc ). This was a stock that consolidated right around the 200-day moving average for a while. This is about what I would call a measured move, the distance between this level and the 200-day moving average, really this little kind of flag pattern right in here, that distance is about the same as this distance right here. So this is one where I think this has run its course, this move has run its course, you want to stay away from this and wait for this stock to come back and test the 200-day moving average, and then, if it starts to bounce, that’s your trade there. The bottom line is this, right now, I go into this more in the Strategy Session for members, the market’s in a little bit of a resting phase, and this is the cycle of markets, stocks go up, stocks go down and sometimes in between the up and the down part are some sideways churning days and that’s really what we’re getting now and it’s really just kind of a function of no real buyers. So until traders find a reason to buy the market right here, right now, you’re going to see some weakness, so I want you to do this, protect the profits that you have. If you’ve been trading since the first of the year, unless you’re short, shame on you, but unless you’re short, if you’ve been trading since the beginning of the year you should be profitable, I don’t want to see you give those profits back by insisting on getting more, don’t do that. Take what the market gives you, don’t insist on more because if you do insist on more the market will reach up and slap you silly very quickly, so let’s not let that happen, okay? All right members get over to the Strategy Session and look at some stocks. Free Chart