NOAH Holdings China Asset Management Stock – 2 Bullish Chart Scenarios

by Olivier on April 14, 2015

A stock I recently highlighted on Twitter has turned into a huge winner. Here is my original tweet on NOAH – Noah Holdings an asset management service company for wealthy clients:

For those of you who can’t see the chart, here it is. Click on the NOAH chart to enlarge:

The stock did behave exactly as I expected. The very bullish moving average expansion was just starting. Price was very close to its ATH (all time high). That’s precisely when the ATH started to act as a magnet attracting price. Then the stop buy order cluster was triggered. That is because a lot of technical traders and momentum traders simply buy when a stock is able to print a new ATH. The strength of NOAH shouldn’t come as a surprise.

The charts of various ETFs like CAF, PEK, ASHR, FXI were Telegraphing the bullish move in China way in advance. My tweet on ASHR was pretty timely, ASHR  started its huge run the very next day:

If you can’t see the chart you need to read the post on my website or go to my twitter feed.

What we are seeing now with NOAH is the first pullback after the run-up. Here’s the current chart taking into account the most recent development. Click on the NOAH chart to enlarge:

As I outlined in my chart annotations, most of the time this is how I look at bullish charts. If a chart has run up, is strongly trending and is in the process of pulling back I do the following. I draw 2 bullish scenarios into the chart:

  • The slightly less bullish flag pattern in grey and
  • The slightly more bullish ascending triangle scenario drawn in blue.

As soon as the stock can reclaim the upper trend line of the flag pattern drawn in grey it means the very bullish ascending triangle is the pattern in play. That’s when I become extremely bullish as I know odds I am holding a winner are extremely high.

Conclusion: It all comes down to the following: When you outline a bullish scenario road map and the stock acts exactly as you expect it to act, that’s when you should be and stay bullish. Then simply give the stock room to develop into an even bigger winner.

NOAH company description from Yahoo finance:

Noah Holdings Limited, through its subsidiaries, operates as a wealth management service provider with focus on distributing wealth management products in the People’s Republic of China. The company’s products include fixed income products, including asset management plans sponsored by mutual fund management or securities companies, real estate funds managed by it, and collateralized fixed income products sponsored by trust companies that provide investors with fixed rates of return. It also offers private equity funds products comprising investments in various private equity funds sponsored by domestic and internal fund management firms, estate funds and fund of funds managed by the company, and the underlying assets that are portfolios of equity investments in unlisted private companies; and other products, such as mutual fund products, private securities investment funds that are privately raised funds investing in publicly traded stocks, and insurance products. The company serves high net worth individuals; enterprises affiliated with high net worth individuals; and wholesale clients, primarily local commercial banks and branches of national commercial banks that distribute wealth management products to their own clients. Noah Holdings Limited was founded in 2005 and is headquartered in Shanghai, the People’s Republic of China.

This paradox exists because most investors think quality, as opposed to price, is the determinant of whether something’s risky. – Howard Marks


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