XING: Weekly Chart Resistance

(Click On Chart To Enlarge)

A target of 16.10 is IN PLAY off the daily chart from yesterday's Cup & Handle breakout, but we can see from this weekly chart that it's a breakout right into about a year's worth of overhead resistance.

That's why I said to Shining yesterday in my "QXM: A Perfect 10" post that, technically, QXM is vastly superior to XING because it has NO resistance.

Looking at this BIG top and the subsequent breakdown in July, in this weekly chart, we can see that everyone who bought XING from about last September to the July breakdown (roughly $12-$19) had a nice paper gain at the highs, but had a sizeable paper loss at the August-September lows.

We've all "been there...done that," and we know how lousy that feels. We also know that if we bought a stock last January at 12.40, watched it rally to 19.92, for a 60% paper GAIN, and then watched that gain completely evaporate and then turn into a paper LOSS of 38%, that feels very lousy.

We're now into October, and after going through that rollercoaster ride in that example, anyone who went through it finally got a chance to "break even" yesterday, if that bought at prices in the low 12.00s last winter.

"Whew! Lemme OUT!"

Not everyone will feel that way, of course, but many will. How many? It depends on how MUCH resistance there is. In this case, it's roughly September, 2006 to July, 2007, which is about 10 months, so fairly substantial. Some of those people trapped above $12 already have sold, and some won't sell at all. They'll hold. But, we've still got to work through that ten months of overhead supply, coming out of base that has formed over a much shorter period: about 2½ months.

Someone on the XING Yahoo Message Board mentioned yesterday that this would be a great time for Wu to release earnings that, hopefully, will impress the market.

And, how! With XING right at resistance, that could help it to blast into resistance, and "would-be sellers" would be much less inclined to sell with the reporting of good earnings, and with the uncertainty about earnings removed.

Speaking of things being removed, I'd also like to see that downside target of 4.11 that is IN PLAY in this chart "get removed" by XING going back above the neckline. I mentioned Bodisen Biotech (BBC) yesterday. When it was at about $11, we had a downside target of something like $5 IN PLAY, which looked as equally ridiculously as this target does in XING.

BBC is now a pink sheeter, trading as BBCZ, at about $1.75. YEEKS :(

We want to see XING move well into this resistance, and hold at/near these levels because this big top wasn't pretty, and it's the primary reason why I decided for the moment to take what was behind Door #2: the 14% gain :)