Friday February 17, 2012
by Richard Schmidt, editor Stellar Stock AlertIt appears that we finally have a bottom in place for the
ishares FTSE/Xinhua China ETF (
FXI). Among our individual stock recommendations,
Netease (
NTES) appears ready for a long extended rally.
The chart for the FTSE/Xinhua China ETF show a weak head-and-shoulders bottom is in place. It’s weak because the left shoulder is slightly higher than the right shoulder. But it’s still a bottom.
And it managed to push the issue up strong through most of January before cooling. There’s more to come and we’re looking for China to regain its footing in 2012.
Meanwhile, Netease has a long-drawn out head-and-shoulders bottom, with the right shoulder slightly higher than the left (just like we want it).
Both shoulders are very long, though, which gives us reason to believe the upward movement will be drawn out over time – and not a big move.
However, long shoulders like this can provide substantial support for a stock – and push it up fast and furious. That’s not as common, but it is possible. We’ll see what happens in the coming months.
We’re already starting to see it move up. Each move down pulls up higher than the previous low. Higher lows is a bullish trend we’ll continue to see for some time.
NTES is a buy. We’ll make it a strong buy when the 50-day moving average moves above the 200-day average.
Learn more about this financial newsletter at Richard Schmidt's Stellar Stock Alert.
