NetEase, Inc. operates an interactive online community in the People’s Republic of China. It offers various games in a range of genres through mobile devices and PCs, including role playing games, MMORPGs, battle arena games, simulation games, collectible card games, first-person shooter games, sandbox games, and other types of games to the Chinese market.
Take a look at the 1-year chart of NetEase (NASDAQ: NTES) below with my added notations:
During the past three months, NTES has formed a level of resistance to watch at the $240 (red) mark. The stock has tested that mark multiple times since the beginning of August. A close above that $240 level would most likely lead to higher prices for NTES, and the stock failed to do so again yesterday.
The Tale of the Tape: NTES has a key level of resistance at $240. A long trade could be entered on a break through that level. However, if you are bearish on the stock, a short trade could be made on any rallies up to $240.
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!
Christian Tharp, CMT