The SINA Stock Chart Continues to Suggest Higher Stock Prices

SINA Stock
Credit:iStock.com/Yamato1987

SINA Stock: Red-Hot Internet Stock

My admiration for Chinese Internet stocks continues, and for very good reason. This sector is absolutely on fire, and the performance numbers are staggering. What compounds this bullish sentiment is that the companies that make up this sector continue to constructively suggest that higher stock prices are still on the horizon. This is why I am returning to focus on SINA Corp (NASDAQ:SINA) stock. I was drawn to this name because the company’s stock chart was compelling, and I am returning to give an update because it continues to pique my interest.

Since my last report on this company, titled “Indications on the SINA Stock Chart Point to Higher Prices,” SINA has appreciated by 30.36% and shareholders have received Weibo Corp (ADR) (NASDAQ:WB) stock on a 1-for-10 basis.

Determining whether an investment is compelling is predicated on a compilation of indications that are generated on the company’s stock chart. The developments on the SINA stock chart since my last publication have been quite constructive, and, as a result, they can be used to shed some light on the direction that the stock price is likely going to take next.

First, it is important to outline what my bullish view on this investment was based on in the first place. The following SINA stock chart illustrates the predominant bullish trend that established my bullish view.

SINA stock chart

Chart courtesy of StockCharts.com

The SINA stock chart highlights the quintessential characteristic that defines all bullish trends, which is a series of higher highs and higher lows. The bullish stair-step pattern that is created is best captured using a simple uptrend line. This tool, which is simply created by connecting the troughs on the stock chart, acts as a dividing line that separates this investment’s current bull market from a bearish one.

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This trend line has been acting as a level of price support since August 2015. The number of times this uptrend line has been tested only reinforces its significance. As long as the stock price remains above the uptrend line, I can only assume that the bull market in this investment that began in 2015 is still in development, and higher stock prices can therefore be expected.

The price action above the uptrend line has been constructive in nature, which serves to reinforce the notion that a bull market is still in development. The following SINA stock chart illustrates this constructive price action and the underlying indicators that support this notion.

SINA price chart

Chart courtesy of StockCharts.com

This stock chart highlights the distinct waves that create constructive price action. Impulse waves and consolidation waves in an alternating wave structure feed off each other, and this creates the essential building blocks required to create a sustainable trend.

Impulse waves, which are highlighted in green on the above chart, define the stage in a bullish trend when the stock price appreciates. Consolidation waves, which are highlighted in purple, define the stage in a bullish trend when overbought conditions from the previous impulse wave are unwound. This usually involves corrective price action, which then sets the stage for a new impulse wave to develop.

The moving average convergence/divergence (MACD) indicator in the lower panel has been instrumental in confirming which wave is in development. The MACD indicator is used to distinguish between bullish and bearish momentum, using the crossing of a signal line. It takes a great deal of bullish momentum to stage a stock price advance, and only the lack of it to stage a stock price decline.

A number of MACD crosses have been highlighted on the SINA stock chart in order to illustrate that, when a bullish cross is engaged, the stock price stages a price advance that coincides with an impulse wave. While a bearish cross is engaged, a stock price correction ensues, which coincides with a consolidation wave.

In my previous publication about this company, I outlined that the bullish MACD cross and the break above resistance outlined by the consolidation wave served to suggest that an advance was set to commence, and that is exactly what transpired.

In order to suggest that higher stock prices are on the horizon, SINA shares need to complete the consolidation wave that is currently in development while the MACD cross remains in bullish alignment. Such a development would suggest that the current peak at $97.81 was only a midpoint within a much larger impulse wave, implying that stock prices can run towards $120.00 before they need to take a breather. Given this stock’s bullish backdrop and the heat propelling this sector, such a feat is not only possible, but probable.

Bottom Line on SINA Stock

I am bullish on SINA stock because the predominant trend is bullish. This view is being reaffirmed by constructive price action and bullish internal indicators. The compilation of these factors points toward higher stock prices, and, therefore, the only justified view on this investment is a bullish one.