As confirmed through today, I believe that the three net China darlings, SOHU, SINA, and NTES are going to collapse v. soon, and projects for a nice shorting/selling opportunity.
Why?
3 Reasons:
1) Momentum breakdown: each stock is off its highs of the past few months and there is no underlying support.
2) Excessive PEs (market cap): SOHU: 176.7 (931 M$), SINA: n/a (770 M$), NTES: 92.3 (915 M$)
3) Unsustainable prices: During the past month each stock had been well above its 250 SMA by more than 2 standard deviations.
Ex: SOHU was above its 250 SMA by at least FOUR standard deviations on each day through June 10 to 17. (i.e., the 250 SMA was between ~7.50-8.00, while the closing price was above 30 in each case).
Now, for my near term price targets (an approximation):
SOHU: $10-12
SINA: $8-9
NTES: $14-16
Comments?
Why?
3 Reasons:
1) Momentum breakdown: each stock is off its highs of the past few months and there is no underlying support.
2) Excessive PEs (market cap): SOHU: 176.7 (931 M$), SINA: n/a (770 M$), NTES: 92.3 (915 M$)
3) Unsustainable prices: During the past month each stock had been well above its 250 SMA by more than 2 standard deviations.
Ex: SOHU was above its 250 SMA by at least FOUR standard deviations on each day through June 10 to 17. (i.e., the 250 SMA was between ~7.50-8.00, while the closing price was above 30 in each case).
Now, for my near term price targets (an approximation):
SOHU: $10-12
SINA: $8-9
NTES: $14-16
Comments?
