Catching the Chinese Cleaver

• Posted by Greg Harmon
• on June 10th, 2011

Like the US Economy, Sina.com (ticker: $SINA) has hit its own little ‘rough patch’ lately. It has fallen so far so quickly that traders are now looking for a bottom or at least a tradeable bounce. But the story behind this stock in the charts only looks worse the farther you step back in timeframe. This makes it more like catching a falling Cleaver than catching a Knife. Look at the daily timeframe chart below. Here you can see that it has retraced about 50% of the move higher from the May

SINA – Daily

2010 low at 32.00. It has pushed out of the lower Bollinger band and seems to have a support range from 88 to 89.56 with the next support lower at 83.50 and then the 200 day Simple Moving Average (SMA) at 81.31 followed by 78. The Relative Strength Index (RSI) is becoming oversold, but not extended, yet the Moving Average Convergence Divergence is growing more negative. So it could stop here or perhaps $10 lower. But a look at the weekly chart shows a more disturbing picture. Here the same short term levels of support between 78 and 83.50 appear but then 74.95

SINA – Weekly

and then 67.26 to 69.15 below that. The RSI on the weekly is steeply lower and the MACD growing rapidly negative. This looks to be in the middle of a correction. But then the Monthly chart is even worse. There is no real support on the monthly chart until the previous double top at 59.80 and then 46 below that. So are you sure you want to try to catch this falling Chinese Cleaver? My suggestion, wait for a confirmed bounce to go long.

SINA – Monthly

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