Tuesday, September 25, 2007

Trade Update - Chinese ADRs Breaking Out

Chinese ADRs are really gaining momentum, although they could be getting a little too frothy. Look at FMCN, JRJC, ZNH, SNDA, etc. That said, I continue to look for breakouts as trading candidates.

Today I took a long (trading) position in New Oriental Education & Technology Group (EDU). The company provides educational services in China, and is growing very fast.

The technical pattern that caught my eye was the cup-and-handle formation. The stock recently regained its 50-day, and was showing excellent relative strength.

Today, the stock is breaking out to a new high on very strong volume. This looks like a solid breakout, and should have some legs. Of course, if China reverses risk management dictates a tight stop-loss. (Like I should have done with LVS!!)

Overall, the market is mixed today, with the SPX lower and the NDX higher. Growth stocks continue to outperform. The semis are higher, while most other sectors are lower. There are also a handful of tech stocks bucking today's weakness.

And the put/call ratio is back up over 1.0, and the ARMS Index is also high at 1.08.

I think given the weak reports this morning, the bears were hoping for a bigger selloff in the market. Frustrating for them.

long EDU; short LVS


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