Thinking about going to China? I’ve got just two destinations for you. (October 20, 2017)
MOMO WB NTES SINA MOMO NTES SINA BABA BIDU
I want to look at China in general. Ultimately we are going to get to Alibaba ( NYSE:BABA ) and Baidu ( NASDAQ:BIDU ), spoiler alert. But, I want to show you that so many of these Chinese stocks are just NOT working now but some of them are. The idea on this kind of a sector or a regional analysis is, you want to stick with the strong ones. Don’t buy these weak ones because well it is down so much and Baidu ( NASDAQ:BIDU ) is up or Alibaba ( NYSE:BABA ) is up. Don’t do that because there is a reason why those stocks are up. If those stocks start to roll over it won’t be because money is going to roll into these stock s that are stinking up the joint now. That is not the way money works. It is not a closed container, it may be rotating, basically, anywhere else. You are not going to get somebody selling Alibaba ( NYSE:BABA ) and buying Momo ( NASDAQ:MOMO ), you are just not going to do it.
Let’s just go through this and look and see. Momo ( NASDAQ:MOMO ), you don’t want to go there. They report earnings in the middle of the month, it is a total crapshoot but just look at this thing technically. We are below the 50-day moving average, lower highs. If this cranks down below 31.00 then we are going to get another lower low. You would almost prefer, if you are going to short the stock, you kind of want to short it up here closer to this last high. Because I would expect the stock to rebound off of 31.00. Simply because when it hit the first time it did it 3 or 4 times after that. I don’t really like shorting much in this market because it just seems like everything is going up. This is one that I would actually be selling more than buying.
Now, Weibo ( NASDAQ:WB ). Finally it has fallen below the 50-day moving average. Volume is about average here; not really below average. When this thing was just kind of drifting in like this it was good to see it on low volume. Because that is telling you that there is not a lot of interest in the stock. It is hanging around $100.00. Not a lot of supply at this level. There is some demand there but we don’t know, there are a lot of maybe’s. Then now, not so much. Because the stock has been in this volatility squeeze, fairly tight bands, and now it has it has fallen below this. I would expect even kind of a little rally back up because not trade is that clear to where two days in a row it has fallen below the 50. Boom! Got to short this stock or get out. It is moving lower, you don’t want to be there.
NetEase ( NASDAQ:NTES ); this has a lot of rebuilding to do. Definitely not where I want to be; it is still below the 200-day moving average. Maybe this is a base. Maybe you buy this here this here and you are going to make some money. But here is my question: Are we trying to play name that stock or are we just trying to make money? My point is, you probably will make more money on other stocks, other Chinese stocks than this. Keep this in mind, that really what this is all about, you just want to make money. It is not wise to say, “I want to make money on XYZ. On Microsoft or whatever.” You just want to make money, period. However you can make it, as long as it is legal, that is what you want to do in your trading. It doesn’t have to be a particular stock and that is something that you have got to keep in mind.
Again, did Momo ( NASDAQ:MOMO ) burn you? Did you miss this move? And now, “By golly, it is back to 30.00 and you see last time I should have bought this thing at $30.00. Now I have a second chance.” No! I guarantee you this, I guarantee that the people that were in Momo ( NASDAQ:MOMO ) here were in there for a particular reason, like it was going up, they are long gone and they are gone for a particular reason; it is not going up anymore. So a $30.00 stock back here in March was a great deal, went up another 50 percent. A $30.00 stock, now in October, is not a good deal, it is going to give back a lot of these gains.
So stay away from this stuff. Stay away from NetEase ( NASDAQ:NTES ). SINA ( NASDAQ:SINA ), that is not where you want to be either, just as a function of risk. Alibaba ( NYSE:BABA ) is still hanging tough; expect good things from this company, they always seem to outperform. I don’t own this stock right now. Because of that, I can’t say, “Oh, you should hold it over earnings.” I don’t own any. I doubt I will buy some before earnings, true confession. But, it is definitely something, if you are long and you are really profitable, I would suggest selling some before earnings just as a function of risk management. But hanging on to some as well. It certainly worked on some of these other stocks lately.
And then Baidu ( NASDAQ:BIDU ), you could be getting your opportunity to buy dude. A nice move higher. Getting a little bit of a pullback here. This is where I am leaving you, Baidu ( NASDAQ:BIDU ) and Alibaba ( NYSE:BABA ), go. The other stocks, no, not right now.
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