3/30/2018 Friday – The market is closed and the weekends are boring because of it! QQQ, BABA, and EBAY review.

Fun Fact #15

Did you know that in the Chinese stock market, the color green is used to represent when a stock goes down, and red is used when a stock goes up?

China is communist, so red is an attractive color (hence red is up). If you’ve been into a Chinese restaurant or celebrated Chinese New Year, everything they have is red. Chinese people also give out 红包 for the New Year, which is a red envelope of money to celebrate. 

Green is a bad color in Chinese culture because there’s a saying “戴绿帽,” which translates to “putting on a green hat.” This saying means “to be cuckolded by one’s wife” which translates to: your wife cheats on you with another man (I hope I got the translation correct).

Also, just in case you are wondering how I know Chinese, I am actually half Chinese and half Caucasian. I’m fluent in both languages even though I spoke only Chinese until I was two. I was born in San Francisco, California and moved to Boulder, Colorado when I was eight. I am grateful to have such a loving family, including a two-minute older twin brother who I deeply admire. We all support each other, and push each other to achieve the un-achievable.

Wow, that got off topic really fast. Back to analysis of weekly and long term trends!

Above is the weekly chart and trend channel of QQQ. I’ve been mentioning that the 160 level is extremely important for the bulls. QQQ was below that level for a couple of days this week, but closed back within the channel. That is bullish. Also, Bulkowski’s CPI indicator has turned bullish. His CPI indicator is scary accurate, so I’ll just assume we bounce up next week. Here’s his site: http://thepatternsite.com/Blog.html#P3

Above is the weekly chart of BABA. BABA has been trading in a pretty wide range in the last 6 months or so. Assuming we stay stuck in that rectangle, I would look to buy near the bottom of the rectangle and sell near the top since I don’t think the bulls or the bears have enough pressure to push the stock past those points. Those levels are about 170 for the bottom of the rectangle, and 200 for the top of the rectangle. A break above or below those levels on the weekly chart would likely lead to momentum carrying the stock price further in that direction. 

Notice how we are right in the middle of the rectangle, so I would not take a new position here. If you are long, I would hold for now. Aggressive traders can also look to short BABA in the 200-205 range which will likely act as resistance. This level also represents a good area to sell your shares if you are long. Of course, if we have good news regarding tariffs next week, BABA could also breakout above the 200-205 range and see much higher prices in the next few weeks. 

In an earlier blog post, I mentioned that EBAY was nearing a good buying level. Look at the weekly chart above. Notice how the last 4 times EBAY touched or crossed the 20 week moving average, it bounced and reached new highs within 2-3 months. Although I don’t hold stocks for that long, you could consider buying EBAY if you prefer holding for months instead of weeks. Also note that there was no fundamental catalyst for the drop. This recent drop from the 52 week high was due to technical reasons. Perhaps this offers an opportunity to buy when others are taking profits. 

I will post more weekly charts tomorrow. I will probably look at ABBV, JPM, and OSTK since I mentioned those a couple weeks ago.

Thanks for reading 😀