So I'm stuck here trying to make sense how NPN can rocket 11% on a single day in the middle of a correction. Given their main income base is in a country that is undergoing manufacturing contraction (manufacturing being the main economic driver and all). The ruble, accounting for mail.ru income has turned into rubble and Japan is threatening to bring down the entire East economy at hastening speed as Abenomics fail to deliver time and again. How in the heck, can NPN raise itself 11% on a single day in the midst of a correction? Because Yellen is cheerful about jobs data? Jobs data which is the ONLY good data set currently out of US? This is an affront to reason and makes a sick joke of technical analysis. Japan shows its all industry activity index is in contraction, much lower than forecast, and the market jumps up another % to 2.37 and the S&P 500 Futures jumps immediately to +.5%? On what planet in which galaxy does this make ANY sense?
Oh Pi, I am obviously short. Any person in his right mind, is short right now, unless you are willing to wait 3 years or more for a possible return when Flipcart will start making up for the losses of Russia income and the increased Chinese competition to level out. NPN is a great company and will probably grow to be the size of Google some day, but the FUNDAMENTALS, for the near term (2/3 years), is pretty bleak. This spike, make no mistake, is largely SHORT buying. Look at the short volume for Tencent on etnet.com.hk and make up your own mind. I have no problem with short buying, but jeez and what the heck, 11% on one day is going to give a LOT of people a punch in the face when this thing drops the other way on Monday. I expect the SA market will coninue with the rally after Hang Seng closes to "price in" the "Monday Increase" for Tencent, but this is all short buying and folks are going to get hammered! Nuff said. South Africa lacks financial market oversight
No DaveW - not an employee at all - just a trader/investor. I think we all need to be aware that the market can become very irrational in the short term because the market is the sum total of a lot of financially irrational decision makers - longer term I think rationality prevails. So if your reason for shorting NPN hasn't changed, then you should maintain your position.
Well, tencent makes up around 70% of Naspers' market cap, roughly by my calculation. It is a $100bn company that they have a 30% stake in. Mail.ru is almost irrelevant - it constitutes around 4% of their market cap. So if they were trading at a discount (normal for holding companies), and the underlying jumps 3% - then 2 things will happen 1) NPN will at least match the underlying move and 2) the discount to underlying will close - so NPN can easily grow faster.
@dave, I also have to ask the question as to whether you are a trader or investor. I assume trader, because you are short. But you are using an awful lot of fundamental mumbo jumbo in rationalizing your trade. This is not the hallmark of technical analysi
Thanks for the reply Pi. Skaaptjop, I did not buy as my attention was elsewhere. Having added to my short at what should have been a resistance level, I felt I could leave that trade and wait for classic trend reversal patterns. They generally don't include 11% spikes in a day, on no relevant news. I was expecting it to go up, but not that high... You are obviously a better trader than I am Skaaptjop, so no need to congratulate you. Happy everyone made money and yes, I am still short waiting to see if this trend now bounces of what should been resistance as support before I close. Skaaptjop, my "Mumbo Jumbo" concerns about what is going on the East are very real and very valid. I am not running around with the cymbals screaming "The Sky Is Falling", but there is a problem growing that is not going to fixed by adding marginal jobs to the US economy a few thousand more than expected every month. Happy they can do it though. There is a global contraction in manufacturing output going on and I don't think the G20 meeting did enough to fix what may be coming. My approach is to trade the downs as I don't trust the ups. They are far to artificial and unsubstantiated as of yet. In a normal market the downs are fast and the ups are slow. Happy trading/investing everyone and hope the new year sees you all richer and happier at the same time. What the heck, Merry Christmas as well!
I am no expert. But I have been doing this for a while now, and over time I have learned there are really only 2 truths to trading. 1) Markets are inherently biased to the long side and 2) price is the only freely available piece of information that matters. Everything else is just noise.