The Reverse Chinese Lottery
- Posted by Greg Harmon
- on March 15th, 2011
A Reverse Chinese Lottery is one where the Winner loses everything. The term was coined 5 minutes ago by me and I am in the process of updating Wikipedia. So a Reverse Chinese Merger lottery winner is a stock that goes to zero based on fraud. With China MediaExpress Holdings, (ticker:$CCME) accepting the award as the latest winner, joining Rino International (ticker:$RINO) the question arises about who is next. Let’s take a look at a few.
China Agritech, Ticker:$CAGC
This one is almost not fair. The odds on favorite at 6:5, it is halted and the company fired their auditor yesterday. It has a nice declining trend line since the beginning of the year, but is getting technically oversold and is testing the bottom of the Bollinger bands. If it comes out of the halt then look for 4 as first support.
China Sky One Medical, Ticker:$CSKI
The dark horse at 4:1, and yes that is a dark horse in this space. It found a support base at 4.63 and attempted to rise from there last week. The Relative Strength Index (RSI) touched the technically overbought line and then rocketed lower. Buy your ticket before a break of 4.63 sends the odds lower to 2:1.
A former front runner, CHBT has been in the cross hairs before. It is breaking support of a long downtrend channel and is outside of the Bollinger bands so it might consolidate before moving further. A break of the support level at 8.75, as a full retracement of the move higher since September, would push the current 3:1 odds back down to 2:1.
SEED has disguised itself by removing the word China from it’s name, but from the downtrend since late February, clearly the market has seen through this ruse. The current odds at 10:1, well above the others, reflect the current food inflation and the possible potential for real revenues down the road. However if the price gets below eh support at 6.81 these odds will likely drop to 3:1.
Finally there is the field. The odds there are still in the 3:1 range and look to remain steady given these lead candidates. Based on the odds this is still anybody’s race. But unfortunately the odds also say that someone is going to win.
If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
- Top Trade Ideas for the Week of September 15, 2014: The Rest
- Top Trade Ideas for the Week of September 15, 2014: The Rest Premium
- Top Trade Ideas for the Week of September 15, 2014: The Best
- SPY Trends and Influencers September 13, 2014
- Macro Week in Review/Preview September 12, 2014
- How to Adjust to the Roller Coaster Market
- Watching DirecTV for a Sunday Ticket Higher
- Premium Earnings 9-11-14
- Playing Sterling For a Bounce
- Loading Up on Cracker Barrel