Chinese stock bottom bases (value plays)
So, here we are. The world markets all declined for the last 3 months and this decline has created lot of value setups. Most of the individual stocks have declined anywhere between 20-50% in just 3 months. It’s very rare to find the true growth stocks anymore due to the economic situation. Hencethe market might be looking at value plays. These are risky plays, but they have good reward. By going through number of charts, we found out that the stocks that have been beaten down are trying to stage a rebound right now. So, the best case scenario here is that these beaten down(and mostly former leaders) stocks stage nice rebound and lift the averages up for the time being. Then the future growth stocks might take over leadership from these value plays. This might be similar to what happened in the beginning of 2009.
So, we are looking for stocks that have been beaten down and are just breaking above the 50 day. We found two chines stocks with that criteria. Please note that these are short term trades(probably 1-2 weeks).
The chinese stocks like FUQI and TSTC have declined a lot in the last 6 months. For example, TSTC declined from a peak of $25 to $8. They have been below the 50 and 200 day for a long time. Now both TSTC and FUQI have closed above the 50 day and might make a run towards the 200 day. Let’s take a look at these charts. The idea is to buy them on a break above the 50 day and sell them near the 200 day.
