Thinking this 11% pullback in Bitauto Holdings (BITA) is a buying opportunity. Watch this video first. (September 09, 2014)
I want to look at Bitauto Holdings ( NYSE:BITA ) here. Look at the volume, look at the way this stock has traded; this has been a really nicely trading stock. I’m not going to go there right now but you could look a Zillow ( NASDAQ:Z ) and it looks very similar to the way Zillow looked at one time. Look at the volume; the stock is in this little consolidation, nice little bullish move, then the stock really picks up here and look what’s happened to the volume, the volume starts increasing.
As the slope gets steeper, as the stock rises at a higher rate, the volume increases. So what’s happening? There’s more and more interest in the stock, more and more traders are coming to this stock. Typically when you see this, literally when you see this, uptrending stock, marked steeping of the curve, increase in volume, and a huge massive spike in volume accompanying what turns out to be the high, because the next day the stock reverses on high volume, just not as high as the day before, but this day before was massive “what the heck happened volume.”
When you see this, this is as close to a blow-off top as you can see; not quite, a blow-off top literally is one where you could really call it a “blowed-up” top, where everybody who’s buying just gets “blowed” up and the stock really reverses down. This is not that but you can see where it’s a big, massive volume, a push up, followed the next day by a reversal and then with all of this buying, and by the way, this is not like smart guys hedge fund or mutual fund buying, those are the guys that are selling; this is you and your buddies buying because somebody’s talking about Bitauto ( NYSE:BITA ) beasting or whatever your terms are. This is like the” Last of the Mohigan’s” coming in to buy this stock on this massive volume.
This is also one other thing, shorts covering; short sellers that have been holding this stock because they’re looking at this and they just don’t believe it, they don’t believe it; they finally have to cover just out of discipline. That drives the stock up and the next thing you know, what this is here and by the way, it’s $100.00, that’s kind of an even number, this is pretty solid resistance, try to imagine a stock after all this move on this big, massive volume spike, what is going to push this stock higher, to a new high? It’s kind of hard to imagine that there’s going to be anything that’s going to do this, that’s going to push it to a new high when all of this massive trading activity could only push it up this high.
So instead now we have what we have is what turns out to be a lower high, because today the stock sold off on volume, look at this massive spike. So now ask yourself again, “Self, what’s going to push this stock higher?” Now we’ve got the stock having traded in this range here, so all of this trading up here, above the line where it is now; look at the volume. So we’ve had massive volume, every share that was traded, that was bought up here and is still being held, these folks are losing money.
So what am I leading up to? I’ll tell you what I’m leading up to, more downside here for Bitauto ( NYSE:BITA ). It is not too late for you to sell this thing; you can always buy it back. But here, the stock, I think, has every potential to fall all the way back to the 50-day moving average, which was by the way $66.00, in a few days it will be up closer to 70.00. So I can see this stock falling another $10.00 or so, $10 or $12.00 before buyers would come in.
And I’ll ask you, if you’re not long this stock are you looking to buy it right now or would you be more interested in buying it if it comes down here? That’s what I’m saying, so if you’re long this stock you need to fix that. If you’re looking to buy it, don’t do that, wait for lower levels, you’re going to get you’re opportunity. Generally speaking though, this cup here, this is a really nice consolidation. So let this rally let this blow-off run its course, slide the stock over, and sometime in October, I’m thinking.
Free Chart