We all know YOKU has been a champion in volatility. Today’s volatility however is completely out of control. It’s only the middle of the trading day and YOKU has seen a 10% intraday move. These are the stats from the open to noon:
| Yesterday’s Close | 46.31 |
| Today’s Open | 47.39 |
| Low | 43.51 |
| High | 48.74 |
Stock opens UP 2.33% at $47.39, then sells of in half an hour hitting the low of the day at $43.51, DOWN 6.05% for the day. It then takes off and adds $5.23 in only 2 hours, trading $48.74, UP 5.25% for the day. That is an 11.3% move in only 2 hours. This volatility is just ridiculous. Check out the chart below!
Seeing how YOKU moves in the marketplace, it is very hard pick a direction and stick to it. I suggest either scalping this name or investing long/short in the name in a longer time period.
Why go long?
- With over 1 billion people, the Chinese Internet population WILL no doubt continue to increase, increasing Youku’s traffic.
- It is hard for US companies to enter the Chinese Internet market due to government interventions, which strengthens Youku’s market share in the world.
- The use of smart phones are growing fast in the US and Europe. This will eventually happen in China as well, which will give a huge advantage to Chinese stocks such as YOKU.
Why go short?
- YOKU books may be honest by Chinese standards, but that doesn’t mean YOKU investors are not at risk when other Chinese frauds are getting exposed.
- Many investors out there believe that YOKU is overpriced because it has not yet even made profits from its operations.
-Cem
Nice analysis. Under these circumsitances, i would prefer to go long. Scalping is another option. Looking for the next article.