A Closer Look at SINA’s 2010 Breakout and 200%+ Run

If you are a CANSLIM investor or a momentum trader, then Sina Corporation’s (SINA) breakout in September 2010 is a beauty. From September 2010 to April 2011 SINA stock experienced a run of over 200%.

As part of my own research, I love going back in time and analyzing major breakouts. Taking a closer look at any stock chart (take the stock chart quiz) and performing technical analysis allows you to understand the patterns better. In turn, spotting them next time around is an easier task.

First, I will display a numbered chart of SINA stock. Refer to the points below for the breakdown on SINA’s run. For more help with CANSLIM investing, read my article 60 Stock Tips for Investment Success and consider some William O’Neil books.

1. After an exhaustion gap in late November 2009, SINA peaks over the next two months then falls into a fresh base in 2010. The base would take over 8 months to form, but its clear support and resistance set the tone for its coming breakout in September 2010.

2. SINA sets up a nice handle for its base. Note how volume surged to form the left side, then dropped off again as the formation took place and prices started creeping up. Volume then returned as the stock made its key break through $46.

3. Volume surges as SINA moves to fresh all time highs above $48, its next major buy point. Volume on the day was the highest of the 2010 year up to that point which is exactly what CANSLIM investors want to see: a massive accumulation day.

4. After several weeks of bouncing in the low $50s, SINA retraces back under $50 and bottoms at $48.50. CANSLIM note: pull backs to the breakout area are very common and should not be feared. In this case SINA stayed $.50 above its original breakout of $48. What gets tricky is when these breakouts fall back under their breakout points. Sometimes this can cause your stop loss to trigger prematurely.

5. SINA forms a follow up base in November 2010 which sets up a secondary buy area between $62 and $63.60. SINA was already up more than 35% from its original breakout at this point.

6. After a peak and pull back in early December, volume drops off as SINA forms yet another base. After such a strong run, volume dropping off minimizes any sell pressure and affirms investors are overall satisfied with the stock at its current levels. This leads into an early January breakout through $74 on record volume yet again.

SINA stock ran all the way to a peak of $147.12 on 4/19/11 which remains as its peak high today. While this is not shown above, the concepts are exactly the same. Maintain a disciplined strategy and big winners like SINA are possible for any portfolio.

More stock chart examples and lessons below.

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Comments

  1. says

    When I go back and look at a chart like this everything seems so obvious, but it doesn’t as it’s going up in real time. That’s what makes trading so hard.

  2. says

    I agree 110%. I love pulling these up though and studying them as it gives me a much better shot at catching the next big break.