Breaking out from a tight cup? Check out Netease (NTES) (June 07, 2017)

by DAN NTES 
I want to cover NetEase ( NASDAQ:NTES ) here in the Chart of the Day. It is back up to this February high. I guess maybe the way that I would describe it is a tight cup. You can see how it trades here. We saw a similar one here and then the stock gapped up and continued to run. This is a pretty bullish pattern frankly. This is the way this stock trades, but the thing that is compelling to me is, aside from the fact that it is a high-growth company, every time we get these kind of cups the ultimate breakout leads to higher prices, at least 15 or 20 percent. You see the breakout here, up quite a bit. And then you see the breakout here, up 10 percent or so. We are just now starting to breakout.

If we just suspend all logic and thinking and overthinking, and we just kind of look at the pattern sometimes, frankly, that is how you are going to make the money; just looking at the pattern. Sometimes there is more to it than that, but a lot of times that is really it, just look at the pattern. When the stock gets up to 340.00 or so, that is when I would look to lighten up on this. Until that time, I am going to stay long. I am going to pay attention to the volume, heavier than average volume over the last couple of days. That is institutional buying. You want to stay long this stock. Rethink it if the stock starts falling back 10 or 15 percent. Otherwise, just stay long baby.

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