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`Chinese stocks have been completely broken in recent months.
In summer, most of these names were doing well. In fact, some were negotiating unprecedented highs, while other IPOs of Chinese companies in US markets have more than doubled or tripled since their IPO.
But there have been a lot of sellers since then. Throughout the summer, these names were called dogs and many of them reached their lowest point in 52 weeks and several years. Some are scandalous, others less, while the trade relations between the United States and China suffer.
Trying to buy now can be like catching a falling knife. But investors who are disciplined and risk-minded may be able to capture a surge if the names remain stable.
Do not forget that this does not guarantee the recovery of Chinese stocks. This is only a road map of possible support nearby. Look.
IQiyi Actions
Known as "Netflix (NFLX) of China", iQiyi (IQ) went public at $ 18 per share in March. The stock actually dropped as a result of the IPO, falling to $ 16 and it took a little while before he found his mojo. However, equities have more than doubled in less than a month before being overtaken in June.
Since then, IQ is under fire from critics. However, during the last trading sessions, while the Nasdaq, the S & P 500 and many of its peers were sinking, IQ held firm.
An upgrade to Jefferies was helpful as analysts imposed a purchase price and a $ 33 price target on the stock. But 25 dollars continues to be a support, the shares being almost stable last week. Even investors in high quality stocks want to be able to say the same thing.
In all respects, resistance at 20 days, 50 days, and the downtrend (blue line) is holding back the IQ stock. A closing of over $ 28 has made iQiyi a good buy.
JD Shares
JD.com (JD) has been pulverized and has dropped more than 50% in recent months. This despite a relatively low valuation and still strong growth.
Current forecasts forecast revenue growth of nearly 30% this year and 25% in 2019. Forecasts predict a 22% drop in profits this year, but they are expected to more than double in 2019. In addition, how much is in account with the decline of more than 50% of the share price?
After surpassing mid-level support levels of $ 30 and $ 30, there was really no reason to buy JD until it gave us a reason. However, with a multi-year support that lasts between $ 22 and $ 23, it could result in a risk / benefit ratio of interest to bulls.
Alibaba Share
The previous support area of $ 165 to $ 170 is clearly transformed into resistance for Alibaba (BABA), the king of e-commerce in China. This does not help that the founder and CEO, Jack Ma, leaves his job in this difficult time for the title.
Although Alibaba's shares have not seen the zone between $ 145 and $ 150 for more than a year, that does not mean they will not be supporting. At least during his first initial test.
If this range were to default, a gap of nearly $ 135 compared to June 2017 would be at stake, while a gap less than this one fill almost $ 126 is technically possible. With tap vacations and the upcoming Singles Day on November 11th, JD and BABA could be optimistic.
For all three names, first limit the risk, then think of the potential reward. After a long and constant defeat, these names begin to have attractive risks / benefits.
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