SINA - Head and Shoulders pattern in formation

[traderthoughts.com]

Sina Corp.'s Q4 results surpassed expectations. Net revenues of SINA increased 25% YOY and 10% QOQ to $70.7M, exceeding the company's previous guidance between $68M-$70M. This growth was primarily driven by the 40% YOY and 9% QOQ growth in advertising revenues. Non-advertising revenues reported a 1% YOY growth and a 11% QOQ growth to $20.6M. A highlight of the quarter was the stabilisation in the mobile value-added service business which witnessed a 12% QOQ revenue growth to $18.6M (this is the first time in the past two years that the company is witnessing a QOQ growth). This revenue is however a 3% decline from the same period in 2006. Gross margin, at 62%, remained flat over the comparable period last year and the previous quarter. Due to the increased marketing expenses related to corporate branding and MVAS business, Non-GAAP operating expenses were $25.8M, an increase of 15% YOY and 12% QOQ. Net Income witnessed a 49% YOY increase and a 2% sequential increase to $17.5M.

However, the stock dropped 4.5% following the announcement of Q4 results. This drop was in line with our expectations. The stock is now trading within a wedge pattern. The daily RSI and the weekly RSI plot in the neutral zone. It appears as if SINA is forming a head and shoulders pattern. For price anticipation, outlook etc. check the free research report on SINA available at www.stocks2pick.com

[optradersc]

SINA is still in a wedge pattern and could still go in either direction. Instead of waiting for SINA, why not take on shorts that have shown break down like CROX and STP. Those would have been easy trades as CROX guidance was poor and you had a chance to get into puts or short selling when CROX was at $27, and same can be said with STP, where STP is still falling and is down to $36.50 range this afternoon. Why wait for SINA to make a move when others are already providing low risk trades giving you possible 3:1 risk ratios. Maybe, because its that website with the free report.

[traderthoughts.com]

If the trader is confident about the direction that CROX and STP will move in the future, he/she should trade on them. Ultimately, it is about personal conviction.

About SINA - Upward slanting wedges typically breaks down (the definition of a wedge also slants in that direction). If the stock breaks upward from the wedge, we need to re-assess the inference of calling the movement a wedge.