Wednesday, July 28, 2010

JASO Watch

JA Solar Holdings Co. Ltd., (JASO) is a Chinese manufacturer of solar cells. To look at the news headlines, it has been having a great run of the happy. Which makes the three major bear signs blotting its chart loom larger than usual.

JASO $6.16

Both the parabolic sar and Person's Proprietary Signal moved to bear phase during Tuesday's trading, and macd turned bearish today. All of this amid analyst upgrades and articles about a rally in the Chinese solar sector.

The reversal, which came Tuesday as an 8.3% intraday slide, was accompanied by a volume spike more than double the prior day's. The stock has been trading sideways for about a year, with a level just below $7 as the range high and $4.25 or so as the range low.

Although the stock is trading above the 20-day simple moving average, the surprise-free move at this point would be for a continued oscillation to the downside, followed by a bounce up from below $4.50.

A bounce off of the 20-day moving average would invalidate that analysis.

JASO's earnings are scheduled for release on Aug. 10 before U.S. markets open.

Person's Table
ppspps openupper pivotlower pivot
JASO $6.16 $6.50 jul27 $5.21 -15.4% $3.65 -40.8%

On the Person's chart, JASO remains well above the upper pivot.

Reversal Levels
  • $6.92, +12.3%
  • $6.51, +5.7%
  • $6.16 <== You are here.
  • $5.90, -4.2% (20-day ma)
Bottom line: For my own portfolio I like JASO as a sideways play. At this point, I would either short it or buy a put and ride it down to the bottom of the range. Were I in a cautious mood, I would wait until the 20-day moving average had been pierced before jumping on board. Another way of playing would be as an iron condor spread with options, although the limited number of strike prices available might make that problematical. A surprise-player, I think, would open a bull positions. But that's a tough call. The news for the sector is fairly good, so it's a case of going against the chart is in fact going with the conventional wisdom. Which is not really a good way to set up a suprise play.

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Tim Bovee, Private Trader tracks the trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment. No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.
  • psar - Parabolic Stop and Reverse
  • adx - Average Directional Index
  • pps - Person's Proprietary Signal
  • ma20 - 20-day moving average
  • macd - Moving Average Convergence-Divergence
  • sto - Fast Stochastic
About the glance: The colors indicate the state of each signal.
  • trend: Determined by the 5-day moving average, green for up, red for down, yellow for sideways
  • adx: orange for above 30-up, blue for 20-down, purple for in the middle. Red is most prone to whipsaws
  • psar, pps, macd: green for bull mode, red for bear
  • sto: green for overbought, red for oversold, yellow for the neutral zone.

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