As we discussed in our automobile stock post Sunday now we can take a look at a Chinese auto play which we profiled in our Tuesday 2/3 Game Plan. We were looking for a break below a bearish descending triangle that never occurred. On Monday it traded as low as 34.69, therefore never taking out the suggested pivot, so a trade was never triggered. It pays to look at how other Chinese internet names are acting as well, as a vast majority of a stocks move can be attributed to the company it keeps. For that name like SINA WUBA BITA SOHU are all making decent attempts at building their right sides of potential bases. Below is how we profiled ATHM in precisely in our report on 2/3.

ATHM is a Chinese online automobile play that is lower 4% YTD and higher by 7% over the last one year period. The stock is lower the last 3 weeks, and each week CLOSED right at the bottom of its weekly range, a poor sign. It also lost ground each of the 4 times it reported earnings in 2014 lower by 12.2, 4.6, 7.2 and 2.6% on 11/5, 8/7, 5/7 and 2/24. A very strong week to start 2014, the week ending 1/9, was followed the next week by a drop of 14% on active volume. The stock has now formed a bearish descending triangle pattern and lets look to short below with a sell stop of 34.40. ATHM not acting well on a strong tape today should throw up red flags.

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