3SOF

Xing went up at the last hour of the day. Will it open and continue to go up in the long term uptrend or is $15.35 the next stop based on the previous day's H & S pattern?

I bought 1/2 of my shares back when I saw the amount of strength in XING.... an am not quite sure whether I should hold them tomorrow.

I sold my shares at 16.40 when it broke opening range in the a.m. and bought back at 16.00 later in the day. XING chart reminds me of last september when it bounced off the 9 ema and made new 5 year high.

Yesterday people started selling China related stocks due to reports on Bloomberg and Reuters saying that Chinese stocks traded in China were crashing, with the main index of the Shanghai exchange falling 7% yesterday.

The fall in Chinese equities was due to a member of the government saying the market was overvalued. I'm not sure about that, but a correction was warranted, since that even with yesterday's 7% fall the market is still up by 17% in 2007.

But I think that has nothing to do with XING, which certainly is not overvalued. In fact, it is one of the most undervalued stocks I've ever seen, considering the 6.6 forward earnings multiple and the 51% year over year EPS growth.

As I wrote yesterday:

QuoteProbably the traders that took profits will be forced to get back in after XING breaks out above the $17.17 resistance level to a new 7 year high.

I'm confident that $17.17 won't be a problem for long, since fundamentals are as attractive as they can be, as you can read on the rest of this thread.

Quote from: brandyjoco on February 01, 2007, 07:29:03 PM
Xing went up at the last hour of the day. Will it open and continue to go up in the long term uptrend or is $15.35 the next stop based on the previous day's H & S pattern?

Brandyjoco,

Since we never can know the future, my feeling is that the best we can do, is know what we're going to do about it .

For example, when the Descending Triangle, which was The Head of The Scotsman's H&S Top pattern, #1 through #4, broke to the downside at Wednesday's gap down opening, that put Target: 16.20 IN PLAY.

At that point, we ask ourselves, "Is that target going to get MADE?"  We can't possibly know that in advance, but we can know what we're going to do about it.

We can sell.  We can short it.  We can decide to hold for the long-term, if that's our perspective.

See what I mean?

The H&S Top breakdown that The Scotsman pointed out put roughly 15.35 - 15.42 IN PLAY (hard to measure exactly, on the intraday charts).

What do we want to do about that?

Stay short (if we're short)?  Wait for that target to get MADE to cover the short? Enter long there, if we're waiting for a pullback to enter?

When the Ascending Triangle (in yellow) formed during yesterday's session, what I wanted to do about it, was to play the long side for a breakout of that pattern, above 16.35, because:

1. Bearish targets (15.35 -15.42) are less likely to get MADE in a stock that is as bullish as XING.

2. The Momo Boys tend to jump all over nice little pattern breakouts, like we had out of that Ascending Triangle, on the print of 16.36.  Remember that it didn't actually print 16.36 (see the Time & Sales on my chart yesterday, for reference)?  XING gapped from 16.35 to 16.37, indicating that players were lined up there to buy, then XING ran higher into the close.

The Ascending Triangle breakout above 16.35 put a target of 16.89 IN PLAY, which would be a return to yesterday's high, which was a gap-filling Bull Trap.

Math:

16.35 - Flat top of the Ascending Triangle, which was 16.35...16.35...16.35

15.81 - Partial gap filling (15.75 - 15.82) low of the pattern

16.35 - 15.81 = 0.54 Points

16.35 + 0.54 = Ascending Triangle target: 16.89

These short-term intraday patterns are much more difficult to play than those on daily charts, so even though 16.89 still is IN PLAY, what I decided to do about my trade, was to "take the money" at 16.64 at the close, because it only was a very short-term trade, off a 1-Minute chart.

The fact that XING closed back above the neckline of The Scotsman's H&S Top puts that downside target of 15.35 - 15.42 ON HOLD, and suggests that 16.89 will get MADE this morning, but again, we can't know that. 

We only can know what we want to do about it.

Quote
I bought 1/2 of my shares back when I saw the amount of strength in XING.... an am not quite sure whether I should hold them tomorrow.

You asked if XING was going to continue in it's longer-term uptrend.  Unless you're working off an intraday chart like this, and analyzing the patterns and figuring the targets IN PLAY, I would suggest that you not make these short-term plays in the market, because you're left not knowing what you're going to do about it.

Rather, I'd suggest that you position trade, and "sell into strength" when targets get MADE.  We've had three targets that MADE, so far: 14.22, 14.89 and 17.20.

Just a suggestion, Brandyjoco.  I certainly don't mean to tell you, or anyone else, how to trade.

Good luck!

Quote from: ygtrdr on February 01, 2007, 08:26:30 PM
I sold my shares at 16.40 when it broke opening range in the a.m. and bought back at 16.00 later in the day. XING chart reminds me of last september when it bounced off the 9 ema and made new 5 year high.

ygtrdr,

Nice going!  Yes, the 9EMA yesterday was at 15.9377, and XING bounced VERY quickly after the partial gap fill of 15.75 - 15.82.  The low was 15.81.

Good luck!

here is another short term view of the hourly chart
rock on xing
max

Melf,

I wanted to thank you for all of your information and replies. I reallyappreciate all of the expertise that you have written on these boards.  You have no idea how you have helped me to make 'smart' trades (AUY was a recent one). It has really been a struggle for me (because of previous losses) and I look forward to your posts.

Thanks again!!

Quote from: brandyjoco on February 02, 2007, 11:23:48 AM
Melf,

I wanted to thank you for all of your information and replies. I reallyappreciate all of the expertise that you have written on these boards.  You have no idea how you have helped me to make 'smart' trades (AUY was a recent one). It has really been a struggle for me (because of previous losses) and I look forward to your posts.

Thanks again!!

Brandyjoco,

You're very welcome.  I'm glad if any of it has been helpful to you.

Interesting day yesterday in XING.

Quote from: Melf Elf on February 02, 2007, 09:07:30 AM
The Ascending Triangle breakout above 16.35 put a target of 16.89 IN PLAY, which would be a return to yesterday's high, which was a gap-filling Bull Trap.

XING attempted to get to the 16.89 target, right out of the gate, but got only to 16.80.

Quote
These short-term intraday patterns are much more difficult to play than those on daily charts, so even though 16.89 still is IN PLAY, what I decided to do about my trade, was to "take the money" at 16.64 at the close, because it only was a very short-term trade, off a 1-Minute chart.

The Bullish Ascending Triangle breakout off the 1-Minute chart was a play against the short-term trend, which turned bearish when:

1. The Decending Triangle broke down, below 16.81.

2. The Scotsman's H&S Top broke down.

Targets against the trend (in this case, we're talking short-term trend, which is bearish) are less likely to get MADE.

Not only did 16.89 not get MADE, look where yesterday's early rally ended: 16.80.

Quote
The Head was a Descending Triangle, that put 16.20 IN PLAY when 16.81 broke on yesterday's gap down below the 16.81 lows.

"Former support became resistance."

So, Thursday morning's gap-filling Bull Trap rally ended at 16.89, which later became the Ascending Triangle target IN PLAY in the 1-Minute chart, but yesterday, the rally to that target ended at the bottom of the broken Descending triangle, which was 16.81. 

"Been there...done that."  XING sold off for the remainder of the day, and we now know that 16.80-16.89 TWICE has been established as short-term resistance.

Quote
The fact that XING closed back above the neckline of The Scotsman's H&S Top puts that downside target of 15.35 - 15.42 ON HOLD, and suggests that 16.89 will get MADE this morning, but again, we can't know that.

Once XING failed at 16.80 and went back below The Scotsman's neckline, the H&S Top target of 15.35 - 15.42 went back IN PLAY.

Quote
XING bounced VERY quickly after the partial gap fill of 15.75 - 15.82.  The low was 15.81.

That gap now has been filled completely, and the close was 15.81, which was Thursday's close.

That could be good enough for another rally attempt, but summarizing what we know about the Bearish short-term picture:

1. We initally had a Descending Triangle breakdown below 16.81, which also was The Head of The Scotsman's H&S Top.

2. We had another Bearish pattern breakdown, The Scotsman's H&S Top.

3. We had a gap-filling Bull Trap rally to 16.89, that failed.

4. We had an Ascending Triangle rally to the 16.89 target IN PLAY that failed at 16.80, below the 16.81 bottom of the Descending Triangle.

With that kind of confirmation of the short-term bearish trend, it seems reasonable to expect that the H&S Top target of 15.35 - 15.42 will get MADE, unless/until we see some evidence that indicates otherwise (like the little Bullish Ascending Triangle on the 1-Minute chart, that broke out above 16.35 on Thursday).

Some comments on the daily chart, next post.





 


 

Any ideas about weak close on high volume?


Best,
Vova

The "fractals" (things that repeat) in XING intrigue me, in terms of both patterns (listed at the top of the chart) and behavior.

Behaviorally, XING repeatedly says, "Wanna see that again?"

Examples:

1. The 13.88...13.88...13.94...13.90 lows of the BIG Descending Triangle (in blue).

"Wanna see that again?"

No, I didn't wanna see that again, which is why I sold XING for a loss at 13.94 on the big, ugly Black Candle on November 27, on 3X average daily volume.

That was very solid support, and that ugly candle indicated that support likely was going to get busted, which it did the next session.

2. The TWO "jam job" rally attempts to get back above what was solid support, and to get back above the broken Descending Triangle (see the red arrows at Purple #1 and Purple #3)

"Wanna see that again?"

No! 

3. The re-test of 12.50, at Purple #4.

12.50...12.52...12.52..

"Wanna see that again?"

Well, okay, but we also wanna see it be support, which it was. 

From that standpoint, we can see why the "blast off" DOUBLE breakout candle on January 16 was so significant.

Now, we come to:

4. The gap-filling Bull Trap rally to 16.89, on Thursday morning.

"Wanna see that again?"

Not really.   

We got a rally to 16.80, the bottom of the broken Descending Triangle, on Friday morning, and that was all.



See what I mean?

When those support levels and resistance levels have held, or have been taken out in XING, so far, it's been meaningful, so it probably is a good idea to pay attention to that 16.80 - 16.89, which now is KEY short-term resistance.

In the daily chart, one of the thoughts that I've had about getting to the 19.06 target that is IN PLAY from the BIG channel breakout, is that we "could be" in an Elliott Wave 4 here.

"Basic" Elliott Wave is that there are 5 Waves.  If it's bullish, Waves 1, 3, and 5 are moves to the upside; Waves 2 and 4 are "corrective" to the downside.

If that's the case:

Wave 1: Was the rally from 11.54 to the "jam job" high of 14.22, which failed at the Descending Triangle (Purple #1)

Wave 2: Was a corrective "a-b-c" decline from 14.22.

a. was 14.22 down to 13.05 (Purple #2)

b. was a rally from 13.05 to the second "jam job" attempt at the broken Descending Triangle (Purple #3), which failed at 13.81.

c. was the decline from 13.81 to 12.50 (Purple #4)

Wave 3: usually is the biggest part of rally, which is was.  I think the Wavers also call that the "recognition wave," where XING had the DOUBLE breakout, and everyone cottons to the idea ("recognizes") that this thing has some upside!

XING rallied from the 12.50 low of Wave 2, to 17.42, for a nice gain of 36.4%.

EDIT: typo...rally was 39.4%.

Wave 4: is another "corrective wave" to the downside, if in fact, we're in an Elliott Wave at all.

If so, we're now in an Elliott Wave 4 correction, with Wave 5 to the upside to come, later on.

In Elliott Wave, there's something about the Wave 2 and Wave 4 corrective phases needing to be "alternating," meaning that if Wave 2 is a "simple' correction, then Wave 4 will be a "complex" correction.

I have only a rudimentary understanding of Elliott Wave, but I think that's right.  Anyone please chime in here, if you would like.

If this is what's going on in XING, it looks like Wave 2 was a simple a-b-c correction.  Down...Up...Down, to 12.50.

So, Wave 4 "should be" more complex than that, meaning that it might take awhile for it to complete, and some pattern to emerge.

Also, in Elliott Wave, this Wave 4 "shouldn't" violate the high of Wave 1, which was the 14.22 "jam job" high, at Purple #1.

So, as far as Fibonacci Retracements are concerned (listed on the chart), that would rule out the .618 possibility of 13.79, because that would put us below the 14.22.

We still could get 13.79, but then it wouldn't be a valid Elliott Wave, according to my understanding.

Just a "thinking out loud" here.

Thanks for the analysis Melf. My re-buy at 16 isn't looking so hot now!

Quote from: ygtrdr on February 03, 2007, 11:38:50 AM
Thanks for the analysis Melf. My re-buy at 16 isn't looking so hot now!

ygtrdr,

You're very welcome.

If this is a Wave 4, we can expect plenty of "thrashing about" up and down movement, so we likely will see your 16.00, and higher, in the process.

Wave 4s are notoriously difficult to play, especially if they are of the alternating "complex" variety.  Patterns tend to "morph" into something else.  Lots of little "false moves," to trap both bulls and bears alike.

We'll have to see if that's what we've got, though.

In the interim, if you care to discuss your expectations of this trade, please chime in.

For example, if you entered before, or at, the DOUBLE breakout in the low-to-mid 13s,  then sold it recently at 16.40, you've got a nice gain, and now have a lot of  "house money"  to play with.

Quote from: ygtrdr on February 01, 2007, 08:26:30 PM
I sold my shares at 16.40 when it broke opening range in the a.m. and bought back at 16.00 later in the day. XING chart reminds me of last september when it bounced off the 9 ema and made new 5 year high.

In general, though, we don't want to be leaping in and out of stocks willy nilly, without having a trading plan, and without understanding the risk:reward on the trade.

For example, if you entered at, say 13.45...then sold at 16.40...then re-entered at 16.00, you saved yourself roughly 2½% on that exit and re-entry, but that's pretty "tight" trading, if you see what I mean.

Unless you normally trade that actively off short-term charts, of course, but I had the impression that you've been in this one, and that you were playing it a little longer-term.

Please correct me if that's wrong.

Quote from: voova99 on February 03, 2007, 05:51:44 AM
Any ideas about weak close on high volume?

Best,
Vova

Not many ideas voova99, I guess it is because of that old fear of poor reporting and inefficient communication from the company. I've been studying several Chinese, Hong Kong, Taiwan and other Southeast Asia companies, and when they don't report results the "American way", the market punishes them with a way below average valuation.

So, the issue on XING isn't just revenues and profits, but about reporting them in the right way. Because institutional investors are suspicious (and perhaps rightly so), of companies that don't file forms 10 with the SEC, just the form 20 as XING usually does.

Dutton said XING is starting to be more transparent. Yes, but still no forms 10.

IMOS is another one with the same problem and much below average valuation. But IMOS is a difficult business to understand (at least for me), XING is more normal. They produce mobile phones in China for the largest mobile phone market in the world, also China.

I think XING is worth much more than $375 M (probably more than $1 B) which is the company's current  market cap, it doesn't matter which papers they file.

I'll continue holding XING.

No melf, you're exactly right. It was a bad trade. I was averaged in XING in the high 11's from December and had been watching it run. I was afraid I was going to see my 40+% gain was going to evaporate so I sold it. Then when I saw it bounce of the 16.00 price level a couple times I bought back in. I let my emotions get away from me. I'm still in it this a.m. Thanks for taking the time to offer your insight.

Everybody knows XING doesn't report numbers in form 10 with the SEC, but that doesn't change the value of a business that makes telecommunications equipment  and mobile phones for the Chinese market, which is the largest in the world.

I believe XING is worth more than $1 B, not the $379 M the market currently values the company.

I know the market worries about China, due to:

1 - There's no complete and free convertibility from the RMB to the USD
2 - There's no democracy in China and the rule of law is dubious

And probably that will always warrant a below average valuation for XING. But come on, a 6 times earnings multiple is too low, at least 12.

XING shares will probably double in 2007, that's my believe and I'll keep on holding XING. 

Quote from: David Randolph on February 06, 2007, 07:10:36 AM

I know the market worries about China, due to:

1 - There's no complete and free convertibility from the RMB to the USD
2 - There's no democracy in China and the rule of law is dubious

And probably that will always warrant a below average valuation for XING. But come on, a 6 times earnings multiple is too low, at least 12.

XING shares will probably double in 2007, that's my believe and I'll keep on holding XING. 

I agree , David .

China has very rich history and philosofy, it's another world not like
the West . We see now that XING may compete with the strongest
companies in the world in high technology.
I think it's matter of time when WS will pay attention.


Hope Q4 revenues will be more than $180mil with operating profit
>$40 mil