Low risk stock again (2010-10-26 China Longyuan Power analysis)

Everyone please be reminded that United Kingdom will be announcing its GDP today, which is expected to drop. It will not affect the stock market in Hong Kong today, but probably will have impact on tomorrow's movement. Crazy rallies these days might keep encouraging you to buy buy and buy.

These days energy stocks were often among the Top 10 percentage rise, so I checked some of the stocks in this industry. Below is the daily chart of China Longyuan Power Group Corporation Ltd. (0916.HK) which focuses on wind farms. The Company design, develop, manage and operate wind farms, and sell the electricity generated by their wind farms to their sole customers — the local grid companies.



Technically, the price is narrowing in a pennant. After touching the bottom line yesterday, it bounced. Although there is still no signal for breakout or breakdown, it worths buying at this moment. Current price is 8.11, level below the bottom line of the pennant is our stop loss level, which is at around 8.0. Potential loss is 1.5%. We could even lower the stop loss price to around 5% loss so we can confirm that it is not a false breakdown.

As it follows the pennant, then at least it would rise to 8.35, which is treated as the first resistant. We could sell some of shares at this point.

If breakout confirms, it could go up to 10. So risk is not high for this stock and is a pretty good chance to make 15-20% profits.