Tuesday, March 14, 2006

Stock Analysis: SNDA (Shanda Interactive Entertainment Ltd.)

Is it “Artificial”?

Watching stock movement has been my entertainment for a while. I enjoy guessing the reason behind any “abnormal” situation. "Exist is reasonable". The “abnormal” probably carries more information then “The Random Walk”.

The behavior of SNDA in the past two days has confused me very much. Without any news, the stock went up $1 at very stable pace. Neither fundamental nor technical analysis would not support such a strong “Bounce”. If yesterday’s result is acceptable, today’s is just too far.

This wave of down stream of SNDA should push the price under $12, which is my theory price of SNDA based on its fundamental.

The two day rally seems broke the trend and turned it to opposite direction. It is not a “normal” situation and seems controlled by a hiding hand. If someone has 10 millions, then he can easily stir the price of SNDA. Could it be someone is trying to pull the price back to certain level, and then release his holdings; or someone thinks $13 is the bottom? Either case, the market seems responded positive and has not added any pressure on it.

For a long term investor, there is no room for even consider SNDA at this time; but for a short term player or option trader, it is an excitement you should not miss.

I would not list all my reasons here (In case I am wrong, those reasons would look stupid, right?) and I don’t want to miss the opportunity to show you some fun. Besides I would do my best, but never ask myself to be right all the time. It is rather my personal preference. I could watch it one more day to make sure whether my guess is right, but wonder there would be little room for my reader to get benefit from it.

Let's quickly jumped into the conclusion which is we should bet the price up also.

My suggestion is watch it tomorrow morning and make sure the up trend is not slow down or turn back, and take your action. My short time resistance estimation is $14.90 or $15.80 (not sure which one is). At any situation, if you see a volume increase and price move down, it is the time to get out.

Regardless of the result, I am sure that we shall all learn something in this case.


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