Have you heard of the slow boat to China? Well, the price action in the Chinese internet stocks is the exact opposite. (August 23, 2018)
BABA KWEB TCEHY BIDU WUBA WB IQ KWEB
Let’s go to China ( NYSE: BABA ) here for just a moment. I think this China trade is over and what I am talking about is not this big chart, I am talking about the move off the bottom when all these stocks reversed on the same day, on the 15th here, last week; right?
You look at Alibaba ( NYSE: BABA ), snapped up, earnings today, nice gap higher, “yippee-ki-yay”, it’s all good, let’s go buy the stock. Wham! The stock trades down. So it’s up 4 percent and then after it opened up it is down almost 7. A lot of guys got trapped here and if you look at the way this chart it right now, I’ll go ahead and say it, to me, this kind of looks like a pretty significant top. A lower high, here’s a low, now we are at lower lows and now we are at a lower high. That is what a rollover looks like.
If you look at these other stocks, the China Internet ETF ( NYSEARCA: KWEB ), again, the same thing; a big sell-off right at the open on Wednesday and then a move higher. Well, this is a bearish engulfing pattern now; where it gapped up above the prior days intraday high and it closed down below yesterday’s intraday low. But worse than that, it also engulfed Tuesday’s move so this is like a double engulfing pattern, a big gulp. So high volume is not where you want to be.
We can look at these other stocks. TENCENT ( OTCMKTS: TCEHY ), the same deal. Again, they all bottomed last week and now they are rolling over in this really short cycle here but the TRENDS are still intact. I am not saying to short any of these names but I am not telling you not to. What I am telling you is that if you bought on this dip over the last few days you have got to exit that trade. Don’t look for China to regain its former luster and sheen. The trend is still intact and it’s all down.
The same thing here with Baidu ( NASDAQ: BIDU ); take your profits, take your money and run. WUBA ( NYSE: WUBA ), the same thing. This was a big massive sell-off here and then a gap up; nice earnings, right? Well, you need to be taking profits here. We look at this and don’t expect that. But at least realize this: IF and this is if, IF the stock rallies back above the 200-day moving average then that would be different. And if you are inclined that is when you buy this stock. This is not my kind of trade. I like these stocks when there are a bunch of winners packed into this stock, not a bunch of losers; right now this is a pretty heavy stock.
But just generally speaking these Chinese stocks ( NASDAQ: WB ), they have been trending lower for a while. Don’t be the one that is going to pick the bottom in this stuff. The bottom was picked right here; that was it. Now we are just looking at a lower high.
And then the last one is iQIYI ( NASDAQ: IQ ). This was a smokin’ stock back in June but since this high here it kind of looks a little bit like the S&P did, in late January, after it rolled over. Now, of all the Chinese stocks that I looked at here, this is actually kind of the most promising and it isn’t that promising. But if the stock starts rallying above $30.00 then at least we could say, “Well, we are still looking for the high,” because right now this is just a little pause that refreshes.
Overall, I am just telling you, when you get this kind of move off the bottom take your money; otherwise, you don’t get paid off for being right on the entry. In order to get paid off for being correct in buying a stock, you do have to sell the stock. I am just saying, I think it is time for China now.
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