I've been a bit wary of a yawning chasm in the chart of AsiaInfo Holdings (NASDAQ:ASIA) that was created by the early December merger/buyout of/with a competitor [Dec 7, 2009: Top Holding AsiaInfo Holding Up 25% on Purchase of Linkage Technologies]. We were fortunate in that the stock was our largest long position at the time (dumb luck), so we sold half our stake immediately and we have been buying it back in drips and drabs on this pullback ... as long as the 50 day moving average was held. It had only been rebuilt to a 1.6%ish exposure however. This morning a stop loss that had been placed in the $27.30s - which would indicate that the 50 day had been penetrated - triggered... and now there is a a good chance to fill the "gap" around $26.00.
As I type ASIA, is in the $26.80s and looks like it wants to make progress toward that goal of retracing the entire move. The problem with buying the stock around $26.00 is the chart is much more troublesome so we'll keep our smaller position and monitor it from here. As a buyer of relative strength I would probably be far more interested in adding back to the position north of $28/$29 rather than $26...
But for today, about 75% of the position was expunged in the $27.30s, leaving only a 0.3% exposure. In the larger picture, the last week has started to show a lot of weakness in individual Chinese stocks even as the general indexes hold up.... keep in mind Shanghai was down 3% overnight as fears of "less easy money" worry even the Chinese. Markets have become addicts to the morphine of endless handouts from central bankers.
Author's Disclosure: Long AsiaInfo Holdings in fund; no personal position