As a momentum player, I look for stocks to show power and strength in the charts. Markets are a bidding mechanism, so higher prices tend to beget even higher prices. Still, we know stocks don't grow to the sky like trees, and we have to be mindful that eventually trends will end and subsequently reverse.
The strongest trends are tough to get on board, however, and Weibo (WB) has certainly given little chance to ride its trend since 2016. Chinese stocks quietly had a very strong year in 2017, led by names such as Alibaba Group (BABA) , Sina Corp. (SINA) , and Baidu (BIDU) , among others. We expect China stocks to continue their leadership in 2018. iShares China Large-Cap ETF (FXI) (China/Hong Kong ETF) was up more than 32% last year.
These names were leaders for practically the entire year, and while they are all in the technology space, let it be known there were other groups that participated to the upside last year.
For 2018 we like Weibo, a spinoff from Sina, to be a strong performer yet again. We can see from this weekly chart, above, that the trend is super strong, and even during a modest sideways action in early 2017 when money flow went negative, the stock price only went sideways to up. That is a very strong positive divergence.
The trend line in place is great support for the stock, and we see this taking the path of the orange line through the next 12 months. In our view, we could see this stock accelerate toward the $150 area in 2018 if the China market continues to gain traction.