Things are looking a lot less bullish for shares of Sina (SINA - Get Report), a stock that's been stuck in a downtrend for most of the last year. Since mid-April, shares of the $4 billion online media company have halved.
There's a big difference, though, between a stock being in a downtrend and merely moving down. That difference means that we have a tradable setup in shares of SINA right now.
In a downtrending channel, the key difference is the fact that shares are bounded by trend line support and resistance levels, a price ceiling and floor for shares that restrain price action within a tight, predictable range. That predictable range means that traders have a way to determine the risk/reward tradeoff on a setup like SINA.Because it's in a downtrend, SINA is a short candidate with an optimal entry near the stock's resistance level. The ideal time to buy is on a bounce lower off of trend line resistance with plans to sell as shares approach trend line support. Yesterday's sharp price action lower is a good bounce. Traders who bet on SINA to move down the channel should keep a protective stop just on the other side of resistance. Sina shows up on a list of Best Chinese Stocks for 2012. Follow @stockpickr