To reiterate, the major indices are trending higher with negative divergences present. Use tight trail stops for current long positions and consider hedging by shorting the market and/or individual weak names. Below is a long idea in NetEase.com, Inc. (NTES) that looks poised to move significantly higher.
NTES: A complex continuation inverse head and shoulders pattern began forming in November 2009. The pattern triggered last week with all forms of confirmation* present: percentage, time and heavy volume. A simultaneous breakout in the downtrend of comparative relative strength of NTES versus SPY, also lends confidence to the trigger. Minimum expected price objective is 59 dollars, measured by the height of the pattern.
Chart 1: Displays the recent breakout of the downtrend in comparative relative strength, of NTES versus SPY.
Chart 2: Below is a daily chart of NTES highlighting the confirmed breakout of a complex continuation inverse head and shoulders pattern. A surge in volume accompanied the breakout in price, also highlighted, which helps confirm the trigger. One may accumulate at current levels and/or wait for a potential pullback, which would provide a lower risk entry, between $43-$43.50. Target: $59, Protective Stops: conservative: hard stop below the recent pivot low, which is $39.90, aggressive: trigger on a confirmed move below the neckline, which is approximately $42.40.
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Disclaimer: The information contained herein is not guaranteed. This is not a solicitation of any order to buy or sell. This material is based upon information that I consider to be reliable, but I do not guarantee its completeness or accuracy. Assumptions, opinions and recommendations contained herein are subject to change without notice, and I am not obligated to update the information contained herein. I have positions in NTES, PRGO and SPY. This communication, including any attachments, is for the exclusive use of the intended recipient(s) and/or the intended recipient’s designees. Any use, retention or dissemination by a person other than the intended recipient is strictly prohibited. If you are not the intended recipient or designee, please notify the sender immediately by return e-mail and delete/destroy all copies of this communication.
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