4 China Stocks Getting Slaughtered

BABA, JD, YOKU, and JKS are among the China-based stocks getting slammed today

Jul 27, 2015 at 11:35 AM
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China-based equities are taking it on the chin again, after the Shanghai Composite suffered its worst day in years. Along with Baidu Inc (ADR) (NASDAQ:BIDU) and Sohu.com Inc (NASDAQ:SOHU), among the notable decliners are e-commerce concerns Alibaba Group Holding Ltd (NYSE:BABA) and JD.Com Inc (ADR) (NASDAQ:JD), Internet TV provider Youku Tudou Inc (ADR) (NYSE:YOKU), and silicon wafer maker JinkoSolar Holding Co., Ltd. (NYSE:JKS). Let's take a look at how BABA, JD, YOKU, and JKS are faring on the charts, and how Wall Street is betting on the shares.

BABA is 2.8% lower at $80.72. Since tagging a record low of $76.21 earlier this month, the shares attempted to stage a rebound, only to be rejected at their 40-day moving average. The stock is now 22% lower year-to-date.

Alibaba Group Holding Ltd shorts are likely cheering the slump. Short interest grew nearly 11% during the two most recent reporting periods, and now represents nearly a week's worth of pent-up buying demand, at BABA's average pace of trading. However, the stock could be vulnerable to an analyst backlash; 21 out of 22 brokerage firms maintain "buy" or better endorsements. 

JD is 4.7% lower at $33.02, and trading back beneath its 10- and 20-week moving averages. Still, the shares remain more than 42% higher in 2015, with recent pullbacks contained in the $32 neighborhood.

Amid all the volatility in China, short sellers have also piled on to JD.Com Inc. In fact, short interest surged 19.3% during the past two reporting periods. What's more, option players are also betting bearishly on JD. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock's 10-day put/call volume ratio of 1.88 stands in the 86th percentile of its annual range, reflecting a healthier-than-usual appetite for bearish bets over bullish of late.

YOKU has surrendered 4% to linger near $19.34, and is testing support at its 10-month moving average. The stock has given up more than 21% so far in July, pressured beneath its 10- and 20-day trendlines. 

Still, option players remain optimistic. The security sports a 10-day ISE/CBOE/PHLX call/put volume ratio of 6.72, indicating traders have bought to open almost seven Youku Tudou Inc calls for every put during the past two weeks. Plus, this ratio registers in the 78th percentile, suggesting a bigger-than-usual bias toward long calls. What's more, traders are paying up for their short-term bets on YOKU, as the equity's Schaeffer's Volatility Index (SVI) of 73% stands higher than three-quarters of all other readings from the past year.

Finally, JKS has suffered the most thus far, down 5% at $22.74. The stock has dropped nearly 23% in July, and is on pace to end south of its 10-month moving average for the first time since February. 

While short interest dropped 14% during the most recent reporting period, these bearish bets still account for nearly 18% of JinkoSolar Holding Co., Ltd.'s total available float. Likewise, the stock's 10-day ISE/CBOE/PHLX put/call volume ratio of 0.50 sits in the 70th percentile of its annual range, hinting at faster-than-usual put buying over call buying. However, four out of five analysts uphold "strong buy" opinions; a round of downgrades could exacerbate selling pressure on JKS.


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