Trader’s Narrative

Last week issue of Barron’s went after Xinhua Financial Media (XFML) because of its relationship with Shelly Singhal. This is a classic method employed by the shorts. Since people rarely change, follow around the “bad apples” and short any company they are involved in.

Xinhua is also an Chinese ADR which is the “it sector” dujour (click for a complete list of Chinese ADRs, ETFs, CEF, etc.).

That sort of attention put XFML in play for this week. On Monday, it didn’t disappoint and gapped down below daily support and round number: $10.

Volume picked up and stayed unusual for the rest of the week. Yesterday I was continuing to watch it when it spiked higher only to falter. Momentarily it spiked low, then recovered (maybe a bad tick). In late morning trading price fell to Wednesday’s low and dripped lower slowly.

The trigger to go short was the inverted hammer with a stop at $6.85 (above the break of support).

Exit was between the $6.20-$6.30 range as price entered into congestion. On a longer time frame (30 minute chart), there was the classic tell of a wide range bar with a spike in volume presaging the exhaustion of the move down (at 1pm).