Discussed in this article: Vipshop Holdings ( $VIPS )

I want to look at Vipshop ( NYSE:VIPS ). This is an online discount retailer out of China and the company announced surprisingly good earnings, beat on earnings and revenues, and the stock is up stocks up almost 15 percent.

Now the competitor of Vipshop ( NYSE:VIPS ) is DangDang ( NYSE:DANG ), so which one do you buy? They’re both in the same space and it just depends, in my view, on what you’re looking for. What I’m really talking about here is deciding how the stock is trading so you can plan your trade.

This is a stock that’s in a channel from about 8.00 up to 11.50 or $12.00 or so. You can buy this stock now with the expectation that it’s going to go there, and that’s a trade. But to buy it now with the expectation that it’s going to go there, let’s just say it’s not supportable by any kind of facts.

So this is a box, you’re buying near the bottom of the box, and that’s your trade. You look at the weekly chart, you can see this stock isn’t trending, it’s not trending, it’s definitely reverse, nice move out volatility squeeze, you’ve got almost a triple here from bottom to top, but the stock is not trending now, its consolidating.

On the other hand, you look at Vipshop ( NYSE:VIPS ) and this stock is trending. You look at it on the weekly chart, it’s trending, and both of these are fairly new issues, not even a couple years old, and so with Vipshop ( NYSE:VIPS ) it’s a different deal. You can buy this stock, and frankly I’ll stretch this back as long as I need to, you can buy this stock, look at the line here, just keep drawing it and say, “You know what? This could be a $200.00 stock sometime in late 2014.”

I can’t say that that’s what I think, but what I’m saying is that this is what the trend shows, and so my point is, with DangDang ( NYSE:DANG ) you can, quote, “call the top” because it’s not in one, it’s in a box. With the Vipshop ( NYSE:VIPS ) there’s no saying that the trend is going to stop right here, there’s no indication of that whatsoever.

The stock traded on really big volume today, and the last time it traded on really big volume, guess what happened? The stock kept moving higher. So this is actually a bullish sign not a bearish sign. But with that said, I don’t really want to buy Vipshop ( NYSE:VIPS ) when it’s up 14 percent, I want to let it settle in, maybe it’ll move even higher tomorrow.

A lot of people look at this video so maybe some of you guys are going to buy it, but I’m not. I think I want to wait for this stock to settle out, it may trade higher, but ultimately in the next couple days it’s probably going to give us a little pull back. Do you know why I think that? I think that because it’s always done that in the past, it doesn’t pay to buy this stock up this high above the 50-day moving average, it just doesn’t pay.

So you stay away from that, you wait for the stock to pull back and then you buy it. But if I had to choose between Vipshop ( NYSE:VIPS ) and DangDang ( NYSE:DANG ) I would take this hands down, because it is in a trend. Here, you’re just trading the chart and there are better charts than that.