Here’s your trade on the China Internet ETF (KWEB) and Netease.com (NTES). (August 15, 2018)
KWEB NTES KWEB WB IQ WUBA BIDU BABA HUYA YY KWEB NTES
Let’s look at KWEB ( NYSEARCA: KWEB ) here. We will look at the China Internet ETF here and this is why: There is a potential, and it is only a potential; there is a potential that this is the tradable low today. I will put the limit here at $47.00. As long as the stock stays above $47.00, well guess what? It is likely going higher not lower because this was the maximum power of the bears; right down here.
The idea is, all of these Chinese stocks have been oversold. NetEase ( NASDAQ: NTES ) for example, I have been talking about kind of stalking that stock; waiting, waiting, waiting. A few days ago it looked like maybe this is the low so wait for the stock to come back above there. It actually did for a brief moment in time and then it continued to sell-off, the stops worked. If you are trying to buy it each morning you are just losing money. But then finally today when the stock gapped down a lot, almost 4 percent, this is kind of where it hovered.
Members know this because I always post this in the forum, I got stopped out of this stock. I lost money on it today, not a whole lot but I took my licking so I could keep on ticking. I bought it somewhere around in here after the opening rotation. It looked like it was moving higher, I bought it somewhere around here. Then I got stopped out. I believe that I went in one more time and I got stopped out and that was it. Two very, very small losses; the stock bottomed right around 10:00 but, frankly, I was on to other things and I didn’t really feel THAT strongly about this. I wasn’t going to look at this and say, “The third time is the charm. I’m in, I’m after this thing.”
Trading doesn’t work that way, not for me, I don’t take it personally. If I lose money once on a stock I am going to make darn sure that I am very careful about getting in again. If I lose money a second time on that same stock I’m not going in again. Screw me once, shame on you. Screw me twice, well, maybe shame on you again. But screw me a third time, Dude, it isn’t your fault.
I am looking at this right now, this could have been a good trade for the long side but it wasn’t. From a dollar standpoint, it was actually pretty good, $6.00 or $7.00 you could have made on this trade but it was just a few percent. And that’s fine but that was today, here’s tomorrow. If this stock stays above, I’ll say, $200.00, this could run another $5.00, $6.00, $7.00, these stocks aren’t going to zero. This could snap back quite a bit; it is way outside the typical standard deviation here.
The idea is you are looking to buy this stock tomorrow; tomorrow is a new day. If the stock starts trading a bit higher you’re in. Similarly with KWEB ( NYSEARCA: KWEB ) here. Plenty of liquidity with KWEB ( NYSEARCA: KWEB ). As long as this stock trades above, I would say $48.00, it’s almost there now, then you are buying the stock at $48.00; you are keeping maybe a 2 percent stop on it, not even that. It doesn’t even require 2 percent of headroom and you will get a move to the upside here and you will make money there as well.
These are a couple trades that you can consider for tomorrow morning. By the way, when you are considering making a trade like this you will have a lot more confidence in your trade if the other Chinese stocks are working. Stuff like Weibo ( NASDAQ: WB ), IQIYI ( NASDAQ: IQ ), WUBA, as I call it, 58.com ( NYSE: WUBA ), Baidu ( NASDAQ: BIDU ), BABA ( NYSE: BABA ), HUYA ( NYSE: HUYA ), YY ( NASDAQ: YY ). If all of these are also moving up then you have a pretty good indication that it is not just KWEB ( NYSEARCA: KWEB ), although that is the ETF, it is like a fund. Or it is not just NetEase ( NASDAQ: NTES ) but it is just, generally speaking, money coming back into Chinese Internet stocks because they have gone down enough. When this thing gets cut in half it is not going to get cut in half again. At some point we are going to see a bounce; that could be tomorrow.
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