Vipshop Holdings Limited (NYSE: VIPS)

Vipshop Holdings Limited, through its subsidiaries, operates as an online discount retailer for various brands in the People’s Republic of China. It offers a range of branded products, including apparel for women, men, and children; fashion goods; cosmetics; home goods and other lifestyle products; footwear; sportswear and sporting goods; luxury goods; and gifts and miscellaneous products. The company provides its branded products through its vipshop.com and vip.com websites, as well as its cellular phone application. Vipshop Holdings Limited was founded in 2008 and is headquartered in Guangzhou, the People’s Republic of China.

To review Vipshop’s stock, please take a look at the 1-year chart of VIPS (Vipshop Holdings Limited) below with my added notations:

VIPS

VIPS had been trading sideways from the end of March until the beginning of May. Over that period of time the stock had formed a clear resistance level at $160 (blue) and a strong level of support at $130 (green).  At some point the stock had to break one of those two levels created by the rectangle pattern, and in mid-May the stock broke resistance. The stock should continue moving higher from here.

 

 

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The Tale of the Tape: VIPS had a level of resistance at $160 and the stock broke that resistance. The ideal long opportunity would be on a pullback down to or near that previous $160 level. On the other hand, one would want to enter a short position on a break back below that level.

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