Stock Chart Analysis SNDA
Shanda Interactive Entertainment Ltd ADR (Public, NASDAQ:SNDA)
The general markets continue to hold up, and have been basically trading sideways for the past two weeks. While overall this is probably more bullish than not, I continue to look for some bearish charts in order to remain flexible and even a little hedged. SNDA is one chart that looks pretty bearish to me, with a nice topping pattern in place.
On the chart below, I highlighted a double top, with the second top also being a slightly lower low. It also had a minor rally in between, and technically is close to a triple top. The name or pattern is not as important as the price action. SNDA had a nice rally from through June, but has been unable to build on the initial up thrust. In fact, volume has increased on the consolidation which warns of distribution. SNDA broke down from the double top in late July and has been trading under resistance for the past few weeks forming a bear flag. It broke down from the flag this week, and could be headed much lower. Both the double top and flag measured targets take it down well into the $30's. While there is a pocket of support near $44, it looks like SNDA is headed for a test of the 200-day moving average before finding real support. Of course there is always the threat of a bear trap, so please do your own due diligence and set your stops accordingly if you take this setup.
Good Trading,
Joey
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