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Tickers in this Article: SINA, SOHU, BIDU, EDU
The stock market continues to bounce off its recent lows, taking many individual stocks along for the ride. Often when the markets make a broad move, many sectors will move in unison as institutions diversify and allocate their money. Often, these moves will last more than a few days, as it takes institutions time to scale in or out into a position. While not specifically a sector, I noticed many Chinese names moving in unison the past few days. Investopedia Markets: Explore the best one-stop source for financial news, quotes and insights.

Sina Corporation (Nasdaq:SINA) for instance, has rallied over 25% from its August lows. What may be a little surprising is that volatility has actually been dying down as SINA consolidates from a ridiculous 100-point rally over the past year. So even after the 25+% surge, SINA remains well within the confines of a trading range that has been forming since April. SINA has been setting gradually higher lows along the way and is approaching the upper trendline framing its base. SINA is likely already too extended to chase, but traders should keep a close eye on it to see if it can clear the triangle it has been following.




Sohu.com Inc. (Nasdaq: SOHU ) is another Chinese stock that has been really strong over the past few days. It also has been consolidating for the past few months, and remains in that consolidation despite the recent strength. SOHU has a clear channel it has been following as it consolidates. It recently reclaimed its 50-day moving average and is currently pushing up against the top of the channel. A push above $85, and more importantly $90, would be worth watching, especially with SOHU not that far from all-time highs.




Baidu, Inc. (Nasdaq: BIDU ) is also showing strength and is only a few weeks removed from all-time highs. On longer-term charts, BIDU has simply been in an amazing uptrend. It stood at $10 a share at the end of the 2008 bear market and has been steadily rising since then. BIDU has been following a repeating pattern of consolidating in channels before resuming its uptrend. It is currently attempting to clear one of these channels and could be headed back to all-time highs soon. (For more, see Consolidation Trading, Trade The Calm, Profit From The Storm)




Another Chinese name that has been following a channel is New Oriental Education & Technology Group (NYSE:EDU). While the overall uptrend is not as impressive as BIDU's, EDU is also fresh off all-time highs. It is trading in a larger base that began in April, and the clear area to watch would be near $32. Any close above this level would be very positive for the stock.




The Bottom Line
The stock market is likely starting to get ahead of itself in the near term as the major indexes bounce towards resistance levels. If the markets pull back in the coming days, it will likely keep these stocks in their consolidations. However, if the markets simply pause instead of breaking down, it could lead to a breakout in these names. The Chinese stocks have a history of volatile moves, and traders should certainly take notice when they are moving together. They still have much work ahead of them, but these names have the potential for a powerful move down the road. (For more, see Investing In China.)

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Charts courtesy of stockcharts.com

At the time of writing, Joey Fundora did not own shares in any of the companies mentioned in this article

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