"The market does not beat them. They beat themselves, because though they have brains, they cannot sit tight." - Jesse Livermore
NEW YORK (TheStreet) -- Guess what I'm going to say today.
Down, up, down. All we're seeing is more chop and failed breakouts for the most part.
E-Commerce China Dangdang (DANG) hit a recent buy note at $14.50, but that note came with the caveat that most breakouts are failing. So I avoided it.
Cash remains the place to be with very few exceptions. Dividend stocks are holding up and paying very handsomely, as my subscribers know, but other than that, I'm just watching stocks and markets until we see a change.
One of the best things about trading is that you have to work hard when the markets tell you to, and you can take some time away the rest of the time, keeping a looser eye on them.
The S&P 500 (SPY) tried to break down below the bear flag and 100-day moving average right out of the gate today, but my rule of not trading for the first half hour, at least, kept me from shorting it and taking a loss.
This market needs time to set up here, and I'm not 100% sure yet if this will become a nice bear flag or not. Time will tell. So until then, enjoy the summer.
At the time of publication, the author held no positions in any of the stocks mentioned, although positions may change at any time.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
TheStreet Ratings team rates E-COMMERCE CH DANGDANG -ADR as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate E-COMMERCE CH DANGDANG -ADR (DANG) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. Among the areas we feel are negative, one of the most important has been poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The gross profit margin for E-COMMERCE CH DANGDANG -ADR is rather low; currently it is at 18.98%. Regardless of DANG's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 0.11% trails the industry average.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Internet & Catalog Retail industry and the overall market, E-COMMERCE CH DANGDANG -ADR's return on equity significantly trails that of both the industry average and the S&P 500.
- DANG has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.44 is very weak and demonstrates a lack of ability to pay short-term obligations.
- This stock has increased by 43.26% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the future course of this stock, we feel that the risks involved in investing in DANG do not compensate for any future upside potential, despite the fact that it has seen nice gains over the past 12 months.
- E-COMMERCE CH DANGDANG -ADR reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, E-COMMERCE CH DANGDANG -ADR continued to lose money by earning -$0.30 versus -$0.89 in the prior year. This year, the market expects an improvement in earnings ($0.14 versus -$0.30).
- You can view the full analysis from the report here: DANG Ratings Report