Summary
The pivot was actually yesterday. Today it took out the high then squatted. I’m going to take advantage of the squat and place a stop/limit buy at yesterday’s high.
My biggest issue here is that it’s a Chinese company. Also, because of that, the financial data is lacking. Nevertheless, the setup looks good and last quarter seemed to be a BO quarter fundamentally. I’m also not overly excited about the overall market direction.
It looks like a Stage 3 that broke back into a Stage 2 instead of 4. Perhaps it was the BO earnings that changed its trajectory. Whatever the reason, I see it in a Base 2 of the Stage 2. The contractions are less than 10% and the volume is very low.
Stage Analysis
This is a strong stock within the CD sector, but I’m not too excited by this sector lagging the SPX.
Stage 2 Criteria
| QUESTION | ANSWER |
|---|---|
| Bullish market trend | NO |
| Sector RS outperforming market | NO, CD sector is 16.95% below SPX |
| 2x average volume on BO from Stage 1 or leading up to it | YES, from Stage 3 to a new Stage 2 |
| 30-week MA rising | YES |
| Price above 30-week MA | YES |
| Overhead supply over past 2 years | NO |
| Outperforming SPX | YES, RS is 84.42% above SPX |
| Length of previous Stage 1 | 38 weeks, 9.5 months |
Base Count
Base Structure
| QUESTION | ANSWER |
|---|---|
| Identifiable base on weekly and daily | YES |
| Prior up-trend of at least 30% | YES, 30.63% |
Length of base
At least 9 weeks ascending base At least 7 weeks for all other bases | 8 weeks, VCP |
Contain elements of strength:
RS at new high Tight price ranges KO Recoveries | YES, all of those listed |
Contain elements of support:
Base on top of base Price above 40-week MA | YES, price above all MA’s and MA’s stacked |
| Shakeout near low of base | YES |
Technicals
VCP Criteria
| QUESTION | ANSWER |
|---|---|
| Decreasing volatility from left to right | YES, down to 9.64% |
| 2 – 6 contractions (typically 2 – 4) | YES, 2 |
| Each contraction is roughly 1/2 the previous | YES |
| Deepest contraction < 50% | YES, 17.72% |
| Deepest contraction < 2.5X the market decline | YES |
| On right side tight price ranges from high to low of range | YES |
| On right side lowest volume in base | YES |
| Rising RS as emerging from base | YES, RS at 52-week high |
Fundamentals
This is a Chinese company, not much financial data is available.
Earnings
| QUESTION | ANSWER |
|---|---|
| Past 2 quarters EPS growth >= 25% | N/A |
| Past 2 quarters margin growth >=25% | YES, most recent Q is up 489.94% |
| EPS growth >= 25% in past 3 – 5 years | N/A |
| EPS surprises | N/A, no estimate data available |
| EPS break out | YES, most recent Q |
| Annual ROE >= 17% | YES, 21.96% |
| Earnings drift | YES, good ED after last Q BO |
Order Details
I’m keeping this minimal because there are some things I don’t like. It’s a Chinese company, has limited financial data, in a weak sector and bearish market.
