Inc (NASDAQ: SOHU) Inc. provides online media, search, gaming, community, and mobile services in the People’s Republic of China. The company’s brand advertising business offers advertisements on its Websites to companies to enhance brand awareness; and search and others business provides customers pay-for-click and online marketing services. Its online game business develops, operates, and licenses online games and Web games; mobile business offers short messaging services, mobile games and, ring back tones, and interactive voice response to mobile phone users; and others business offers Internet value-added services and licensed video content.

Please take a look at the 1-year chart of SOHU (, Inc.) below with my added notations:

1-year chart of SOHU (, Inc.)

SOHU has fallen pretty hard over the last month, almost in a “straight line”. However, the stock had held an important level of support at $60 (blue) for the last several months and one might have expected a bounce off of that level. Nope. SOHU has broken that support and should be moving lower from there.


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The Tale of the Tape: SOHU had a key level of support at $60. Now that the stock has broken support, a trader might want to enter a short trade at or near the $60 level with a stop placed above that level. A break back above $60 could negate the forecast for a move lower.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!

Christian Tharp, CMT

Follow me on Twitter: @cmtstockcoach