NEW BEARISH Plays
500.com Limited - WBAI - close: 31.04 change: -1.55
Stop Loss: 34.05
Target(s): to be determined
Current Gain/Loss: unopened
Entry on May -- at $--.--
Listed on May 15, 2014
Time Frame: 6 to 8 weeks
Average Daily Volume = 389 thousand
New Positions: Yes, see below
Why We Like It:
WBAI is in the services sector. This is a Chinese company that provides online sports lottery services inside the country of China.
It certainly looks like WBAI has peaked with shares reversing in early March. It's probably not a coincidence that WBAI peaked the same time the NASDAQ did. Momentum names and growth names have been getting hammered over the last couple of months.
WBAI reported earnings on May 7th that were better than expected and yet traders sold the news. It's possible that WBAI is just not growing fast enough. The stock currently sports a P/E of 56 and maybe that's just too high for investor's to stomach at the moment.
This past week there new headlines regarding WBAI. A Chinese newspaper said that the official China Sports Lottery Administration Center had not authorized any sports lottery websites, thus making WBAI's business illegal. WBAI denied the story and claims it has all the official approvals necessary to operate in China.
Technically the stock is sinking in a bearish pattern of lower highs and lower lows. I am suggesting small bearish positions at the opening bell tomorrow morning. We'll try and limit our risk with a stop loss at $34.05 but that's a relatively wide stop loss. Readers should consider this an aggressive, higher-risk trade.
I am not setting a bearish target just yet but the
Point & Figure chart for WBAI is bearish with a $26.00 target.
Suggested Position: short WBAI stock @ (the opening bell)