Monday, May 24, 2010

CHIB : China Banking Corporation Analysis

I've been trading CHIB for more than a year now. I just want to share my points on why I went all-in on this stock.

Aside from CHIB constantly giving me 10% stock and 12.00 cash I can see some predictable behavior of this stock.

Since last year, there are 3 price increase for CHIB.

272 - 336 (April 2009)
304 - 390 (September 2009)
350 - 430+ (May 2010)

Of these 3 major price increase, there's always 5% resistance before it goes all the way to 20-30% gain.



Further, a 5% support also occurs before it goes down again.

Thus my strategy here was I got on board after the 5% resistance, and since there's a stock and cash div TBD, I think this stock will not plunge back to 360+ levels.

I just need to figure out what my stop loss is, in case this price increase is the initial price spike before the cash/div declaration.

See March - April 2009, there's no dividend declaration yet, then the second peak, September 2009 was when the record-date was announced.