Qihoo 360 Technology Co Ltd (NYSE: QIHU)

Qihoo 360 Technology Co. Ltd. provides Internet and mobile security products and services in the People’s Republic of China. Its core Internet security products include 360 Safe Guard, a solution for Internet security and system optimization; 360 Anti-Virus, an anti-virus application that uses multiple scan engines to protect user’s computers against various kinds of malware, as well as 360 Mobile Safe, a security program for the Google Android, Apple iOS, and Windows smartphone operating systems.

To review Qihoo’s stock, please take a look at the 1-year chart of QIHU (Qihoo 360 Technology Co. Ltd.) below with my added notations:

1-year chart of QIHU (Qihoo 360 Technology Co. Ltd.)

After selling off in March and April, QIHU has formed a trend line of support (purple) since its May bottom. Always remember that any (2) points can start a trend line, but it’s the 3rd test and beyond that confirm its relevance. As you can see, the market deems QIHU’s trendline to be very important. In addition, the stock also has a key level of support at $75 (green).

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The Tale of the Tape: QIHU has a trend line support and a lower $75 support. A long position could be entered on a pullback down to the trendline, which currently sits near $92. A short position could be entered if QIHU were to break below the trendline with an expectation of a fall back down to $75.

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