Wondering Which Way to Go with Weibo (WB)? Here’s my take. (May 17, 2017)


The market took a rest today. Basically everything except the inverse ETFs and some gold stocks was down, so I want to look at Weibo ( NASDAQ:WB ) here. Look, they reported great earnings yesterday, you see the move that this thing made. I would be selling this stock right now; I wouldn’t short it. If you own this stock, and I don’t care if you bought it yesterday at the high, I would be selling it taking a loss. I don’t think this stock is going to fall back down here and close this gap, and this and that, but it might, you just don’t know.

But here is what I do feel pretty strongly about, and that is that it takes a lot buying pressure, look at this massive volume, to push this stock up this high and then we got some selling today. Where are the buyers going to come that are going to actually be so aggressive that they can claw through, they can absorb all of this supply from traders who own the stock, and are looking at this, and they don’t want to let their profits slip away so they are selling? How much demand is it going to take to absorb all of that and still push the stock up to new highs? I think it is going to require more than exists.

This is still way outside the second standard deviation. If we look at even three standard deviations, which is like against the law, the stock closed above the third standard deviation yesterday even traded up to it today, back down below that. But what I am saying is, this is a really, really overbought stock. If you have fallen in love with it and you don’t want to sell, that is fine. Because guess what? You are not risking much money to do it this way: The stock closes here. Here is the intraday low, right down here. You are risking another 1 percent or so if you just put a stop below today’s intraday low and then only sell the stock if your stop is hit.

Personally, for me, I wouldn’t even wait that long, I would just sell it and figure, “You know what? If the stock starts moving up again I will go ahead and buy it.” My feeling is, ultimately it is going to move back up again. I think it is a $100.00 stock, just not tomorrow and just not next week. If anything, probably a $70.00 stock or even a $65.00 stock before it is a $100.00 stock. So take your profits. Take the money and run. Do the Steve Miller trade, wait for this thing to reset. And in fact, wait for the market to reset.

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