NEW BEARISH Plays

Sina Corporation - SINA - close 38.70 change +0.45 stop 42.25

Company Description:
SINA Corporation (SINA) is an online media company and mobile value-added services (MVAS) provider in the People’s Republic of China and for Chinese communities worldwide. The Company offers a network of localized Websites and provides services through five business lines: SINA.com (online news and content), SINA Mobile (MVAS), SINA Community (Web 2.0-based services and games), SINA.net (search and enterprise services) and SINA E-Commerce (online shopping). Together these business lines provide an array of services, including region-focused online portals, MVAS, search and directory, interest-based and community-building channels, free e-mail, blog services, audio and video streaming, game community services, classified listings, fee-based services, e-commerce and enterprise e-solutions. The Company generates revenues from online advertising and MVAS offerings, and, to a lesser extent, from search and other fee-based services. (source: company press release or website)

Why We Like It:
SINA is forming a descending triangle on its daily and weekly charts. The stock did find support at $35.25 this past week and bounced nicely. However, I feel the conditions are ripe for this stock trade lower in the coming weeks, especially if we get a sustainable market correction. Its 20-day SMA and 20-week SMA are overhead which should provide good resistance. The 50-period and 200-period SMA's are providing some support for the stock right now, but I feel it is only a matter of time before the stock breaks these SMA's. I suggest readers short SINA if it trades up to $37.60 or if the stock trades down to $34.95, whichever occurs first. I am going to place a wide initial stop at $42.50 until we know where the position was entered. Once we are triggered the stop will be adjusted. Our first target is $33.25 which is a point where I would tighten stops to protect profits. A more aggressive 2nd target is $30.50. If a market correction gets going I think SINA could easily trade down to this level.

Suggested Position: JUNE $35.00 PUT, current ask $1.60

Annotated weekly chart:

Entry on May xx at $xx.xx
Earnings Date June 9, 2010 (unconfirmed)
Average Daily Volume: 1.1 million
Listed on May 1, 2010