As in any market drop, there are two positive things that came out of the recent one:
Last two days' sell-off of Sinopec (600028.SS) after the "good news" (China's increasing fuel price) is a classical example of "buy on rumor, sell on news".
During the last month or so, people bought the stock in anticipation of the fuel price increase, resulting in the extrodinary strength in stock price. Once the actual news was out, funds started to sell because the company will continue to lose money and no positive news are to be expected in weeks if not months.
Interesting because of the strength shown in the RSAP line (purple, see chart below) during the recent market on-onslaught. One of the strongest in the brokerage group.
The negative? it's very volatile!
Note: the price and volume have already been adjusted for splits.
This could be just an error, but IOC closes up $10 to $41.6, or 32% in one day, at the very last minute of the day. Must be short-covering (or reporting error).
If the price was real, it could pop another $20 tommorrow!
Two big problems for me:
Other than those listed above, the charting program works just fine.
Western Refining Inc. (WNR), the strongest in the refiner group, though part of the strength could've been due to analysts' positive comments. P/E of 7.1 at $14.
Canadian Solar Inc. (CSIQ), a Jiangsu, China-based solar panel manufacturer. Leader in the solar sector. Made 0.61 last quarter. Raised guidance for Q2 and for the year. Very reasonable forward p/e at $42.
Ivanhoe Energy (IVAN), heavy oil degrading technology company. Nice recovery in price after financing deal a couple of weeks ago. More deals likely. Very strong volume for past months. Huge volume at resistance 3.11.
Actually yesterday's IVAN performance is another good example in which resistance is a good thing for people who would like to accumulate a lot of shares w/o raising the price too much. It's also an excellent way to spot breakout before it actually happens.
Much of stock investing, though not all of it, is about reasoning as well as having a vision. It's about making sense of the related data, building models that fit the data and comply with the vision, and updating these models as more information becomes available. What else, at a reasonable probability, other than a looming breakout could have explained the action of IVAN yesterday?
Link to three-year weekly chart of Shanghai Composite Index ^ssec
Link to three-month daily chart of ^ssec
Very ugly market in mainland China. Went down from 5800 to 2800, or 52%, in eight months!
Technically speaking, there is no sign of bottoming yet. Fundamently the real hardship (the expected recession) hasn't started yet. Imagine when there is a real crisis ...
My interpretation:
(Absolute score values are not as important as their sign (positive/negative)):
Total score: +3
Weekly chart: negative
Underlying story: company with high debt/equity ratio trying to make money from new handset chip facility. Key markets are in Asia. Cutting cost by laying off 500 people recently. Very low price-revenue ratio. Analog to AMKR a year(?) ago?
Summary: Under accumulation during last two months. However the recovery/break-out, if to occur at all, may be slow and months away. Chance of going under is real. High reward/high risk play.
*** Model subject to updating upon new data ***
Link to UPDATE 1-China turns gasoline importer as crude runs fall | Markets | Reuters
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The government really needs to crack down the financial TV channels, software vendors, "inside" information providers, and even government-owned security firms and banks that are really committing crimes by making bogus claims on the performance of their financial products. Unfortunately this kind of crimes are seen in China everyday.
The users should share the blame as well.