SINA’s daily chart has broken a large falling wedge, broke through the SMA 50, failed and dropped again to test the wedge’s top line. Now it is back to take a crack at the SMA 50. I added it on this morning’s pullback from the SMA 50.
MACD and RSI have been positively diverging the negative price since August. AROON has just started to trend up and ADX shows downside momentum washed out and +DI moving upward as -DI moves down. All in all, the daily indicators are constructive.
Combining that with the idea that SINA is probably under tax loss selling pressure, if global markets and in particular China’s market holds up, it could be a good trade for a seasonal rally. I’d expect tax selling to be in play for a wide range of losing stocks for a few more weeks.
The weekly chart shows the stock put in at least a temporary low at key long-term support, which was the 2015 high and a low from 2 years ago. What’s more, MACD is gently triggering up and RSI has come from very oversold and gotten above its EMA 20 and the 30 level. The big trend is obviously still hard down by AROON and the downside momentum is still fully in play on ADX. But the daily chart needs to change before the weekly would.
This update holds the caveat that global markets would probably need to find a seasonal relief bounce in order for this to work out. As with most longs I hold, that is my qualifier right now. If I give up on the market bounce, I raise cash. No ifs, ands or buts.
If this is a successful trade, the hard declining 200 day moving average (currently 86.09) seems like a reasonable target. That would be approximately 35% above the current price. A hard stop loss should be the green support line at 56, if not higher depending on risk tolerance. A short-term trader would not want to see it go lower than last week’s low of 60.11.
A reminder that chart based NFTRH+ updates are technical trade setup ideas, which may not be revisited as the buy, sell, stop parameters are already noted. They are meant as a starting point for your further research if interested. I will not personally buy every item highlighted and will sometimes sell (ref. Trade Log) any item that I do buy below target (assuming I’ve not stopped out or sold for some other reason), which is something I often do as a trader. Also please be aware that I am not a fundamental stock analyst. Due diligence is your responsibility.