Jump Into Sina

 | Jan 10, 2014 | 9:00 AM EST
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In the bigger picture, I like Sina (SINA) for a trade. In late November we had a counter-trend buy setup in place for this stock -- one based on Fibonacci time and price parameters. More recently, all the daily moving averages have been suggesting continued higher prices: Upside potential goes to the $98.13 area.

Specifically, late last month Sina moved back above the 50-day simple moving average, having already traded above the 200-day SMA. Also, since late December the five-day exponential moving average clearly crossed above the 13-day EMA. This serves as further support for a buy-side entry. 

Sina (SINA) -- Daily
Source: Dynamic Trader

Since I'm still shooting for higher upside targets in this stock, I want to take it down to a lower time frame chart. In this way, I can really refine my risk and set up the buy side again after Thursady's healthy pullback.

Since I don't want to be a buyer up at current levels, which would mean putting my risk far under the Nov. 26 low, I'm going to identify a rather important price support cluster that I want to see hold above on a 30-minute chart.

Now, before I go through the actual short-term setup, some of you may have noticed that I already have a position in this one without having seen a typical "buy trigger." In my trading plan, when all of the moving averages are supporting a trade setup, I am allowed to take a spread in options and define my risk either below the cluster or below a prior swing low. That is what I'm doing in this case. Now, let's look at the setup on the 30-minute chart.

Sina (SINA) -- 30-Minute
Source: Dynamic Trader

The support cluster comes in at the $83.12-to-$84.37 area, an area that includes quite a few 100% (symmetry) projections of prior declines within the uptrend, as well as some key Fibonacci price retracements. Notice the similarity of the current decline with some of the prior declines illustrated on the 30-minute chart.

Bottom line: I am a buyer in Sina against this support level, with my maximum risk defined below the prior swing low around $82.36. I will consider the trade a bust if this prior swing low is taken out, and I'll exit my position. If the stock holds above this key zone, the initial upside target comes in around the $91 handle. Also don't forget there is a bigger-picture target that comes in around $98.

So, as long as this key short-term decision remains intact, I'll like the buy side of Sina.

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