NEW BULLISH Plays
Sky-mobi Limited - MOBI - close: 7.75 change: +0.12
Stop Loss: 7.19
Target(s): To Be Determined
Current Gain/Loss: unopened
Entry on June -- at $--.--
Listed on June 25, 2014
Time Frame: 8 to 12 weeks
Average Daily Volume = 696 thousand
New Positions: Yes, see below
Why We Like It:
China is a massive market and continues to see strong growth in mobile phone adoption. That means more application downloads for the smartphone market.
MOBI is cashing in on the app download business with their Maopao app store with 147 million users. They've already had over 15 billion apps downloaded from their store since 2005.
MOBI has strategic partnerships with China Mobile and China Unicom plus over 100 Chinese OEMs who pre-install MOBI's Maopao store on their mobile platforms. This allows MOBI to gain 400,000 new users every day.
When the stock market peaked in early March investors sold all of the high-growth and momentum names. MOBI was caught up in that sell-off with a correction from $12.00 to $6.00. Now shares appear to have found a bottom at the $6.00 level. The recent pullback this week looks like and entry point given MOBI's long-term prospects. The mobile gaming market in China is expected to surge +94% in 2014. MOBI's sales will surge as gaming grows.
Technically MOBI is starting to bounce after a 50% retracement of the rally off its June lows. We want to jump on board and buy today's bounce at the opening bell tomorrow morning. More conservative investors might want to consider waiting for a rally past $8.00 as an alternative entry point.
We are not setting a target just yet. I will point out that the point & figure chart is bullish and forecasting at $13.00 target.
This can be a volatile stock. Traders may want to consider limiting their position size to reduce their risk.
Launch positions tomorrow morning
Suggested Position: buy MOBI stock @ (the opening bell)
- (or for more adventurous traders, try this option) -
Buy the Oct $10 call (MOBI141018c10) current ask $0.85
Option Format: symbol-year-month-day-call-strike
P&F chart :