I was early in September by trying to locate a climax run in PTR in this post:
Petrochina (PTR) Climax Top?
However, the HUGE volume on the latest push to new highs clearly indicates something is going on.
As I mentioned in the last post, a climax top is where the stock has advanced for many months and suddenly races up for one or two weeks much faster than any prior one-or two-week period or since the beginning of the stock’s long move up.
And the stock does this on the largest volume of the run (something that didn’t qualify in my September post at $181). PTR finally has the extreme run with large amounts of accompanying volume. I do advise selling into this incredible strength, especially since Warren Buffett has sold most if not all of his holdings in Petrochina as documented in the SEC filings.
Chris,
What about the rest of China. I’m thinking a little time out is all that is needed for FXI and ILF (latin america)
David, not sure if I follow what you are asking? Is the rest of China ina climaz run? Probably not but we will see wild swings with pullbacks and jumps.
Chris,
First, I like your column a lot. You are one of very few genuine blogs about trends amongst a sea of pretenders.
About PTR, the move yesterday does seem a bit strange and exaggerated. So your advice to sell may be gold.
But in your first picture, where you mark a candlestick and comment ‘Violation of upper channel line’, I would not have interpreted that in the same way. To me, it was a signal of a new rally after a natural reaction.
Abhi,
It can be marked as both: a buy signal for a new breakout and an upper trend channel violation. That line is now support if and when the stock drops. The first call at a climax run was early because the volume was lacking and I should have noted that in the blog post.
PTR is down today but we all saw that coming with China getting hit with bad news early this morning.
Would you guys be so bold as to short PTR here?
MDJ,
I wouln’t short here as put options are the better play with lower initial risk and larger reward. It’s risky but the premium is all you would have at risk and yo can place a stop on that loss as well. November or December puts are my short term play. But I would not short to answer your question.
Keep in mind that much of this stock’s movement tracks the Chinese stock (0857), which doesn’t follow the basic principles of finance and/or the human psychology that is embodied in technical analysis. We’re playing by the right rules to the wrong game. What, to us, looks like a climax, could just as easily be a rest stop on the way to XOM’s market cap. I lost money shorting it (with puts) before, and I’d sure as hell would love to short it now, but the puts are too expensive to justify the risk that this baby could hit 300 just as easily as 200.
Chris,
It’s interesting you brought up the climax top as I shorted TBSI yesterday based on this type of analysis (volume surge after extended run). I got burned on that one, but I have to say some of the Chinese stocks are quite tempting . . .
Hey guys,
I agree with everything covered in the comments. The puts are over-priced, too much to justify the position. Besides, I already have a long straddle placed on VMW that is very speculative. I can’t have too many spec plays at one time in this type of market.
To get back to the post: ignore shorting or buying puts for PTR. I will stick by my analysis and advice: Sell into strength.
That’s all, forget trying to pick a top in Chinese stocks but capture hard profits. It may go to $300. Seriously, I wouldn’t doubt something as crazy as $400 within a couple months. However, just as Dave mentions, $200 in not out of the question by next week.
Nice comments!!!
The stock clearly looks overbought but it has looked that way to me for quite some time. Even today the Chinese energy stocks rallied back from their intraday lows.