Cutting Back on Perfect World Temporarily

I really like Chinese gaming company Perfect World (PWRD) from a fundamental perspective; after selling off from its guidance after a very good earnings report [May 19: Perfect World - Good Earnings, Light Guidance - Buying the Dip] the stock spent a few days in purgatory before making a nice rebound. However, at this point technically we have some technical resistance ahead,. Both the 50 and 200 day moving averages lie ahead; the 50 day in the $26s and the 200 day around $27.

Honestly this is as perfect of a setup as you could ask for from a technical perspective. Sell now right below resistance areas, and rebuy either (a) on a move over $27 or (b) on a pullback. So I'm executing the first part of that strategy (sell) here around $26.20... then for the second part (buy back). If the stock shows strength, we'll pay up maybe around $27.50 and get the position back or on a pull back to lower to mid $20s, then we'll do the same buyback.

Temporarily I'm cutting this position back from a 1.1% stake to 0.2% stake and am awaiting a move either way by the stock. Due to the higher expenses and 3 days lost for national mourning due to the Earthquake, this stock might have some overhang, but it's a lot of consternation over nothing in my view.

[May 20: Motley Fool on Chinese Gaming]

Disclosure: Long Perfect World in fund; no personal position