E Commerce China Dangdang Inc (DANG) and other hot Chinese IPOs have offered a ton of opportunity this year and especially in December as shares of Youku.com Inc. ADR (YOKU) and DANG skyrocketed on their trading debut.
There is an art to trading them the first few days and then after. DANG ran from around $26 to $35 and then punished all of those who chased the excitement. In the past few sessions we put this on the radar for my personal favorite countertrend setup: the RedDog Reversal.
In today’s live Morning Call and my PricePoint Sheet DANG was on my focus list.
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The pivot price was $22.80, yesterday’s low of the day. The stock broke the level and went as low as $22.56. As the stock crossed back above $22.80 it was the trigger buy as dictated by the RedDog Reversal strategy and a stop is to placed at the low of the day.
This setup this morning presented a calculated risk of ~30 cents in a hot Chinese IPO symbol that has pulled in over $10. There could be nice reward here.
We use this set up at T3live in any stock and any sector. Learning how to use it, is like learning how to fish. It’s a great daytrade that can sometimes be a major inflection point. Traders will have to use their timeframe and skill-set accordingly.
*DISCLOSURE: Long DANG
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