China-based video game publisher and online portal NetEase (NTES) surged to all-time high on Thursday, after posting fourth-quarter sales and earnings that beat estimates. Other Chinese internet stocks also rose, including Momo (MOMO), Tencent (TCEHY) and Weibo (WB).
U.S. shares of NetEase soared 13% to a record high near 297 in afternoon trading on the stock market today. In afternoon trading, NetEase was up over 12%, near 295.
But the stock’s action raised caution flags. NetEase is well-extended from a classic buy point after breaking out of a fourth-stage base. (Later-stage patterns tend to be riskier.) And its relative strength line, which compares the stock vs. the S&P 500, is barely back to old highs even with Thursday’s big stock move.
IBD’S TAKE: NetEase is the top-rated stock in IBD’s Computer Software-Gaming industry group, with Activision rated No. 2. See the other top-rated video game companies and how they stack up vs. objective fundamental and technical data at IBD Stock Checkup.
NetEase earned $4.40 per U.S. share with revenue of $1.743 billion, up 53% in local currency, in the December quarter. Analysts had expected adjusted earnings per American depositary receipt to rise 38% to $3.44, with sales climbing 37% to $1.58 billion.
Mobile social app maker Momo saw its U.S. shares rise for the fourth straight day on Thursday. It was up 2.8%, near 27, in afternoon trading on Thursday.
Momo broke out of a cup-with-handle chart pattern at a buy point of 23.96 on Feb. 8. It is now extended past its buy zone. The stock hit an all-time high of 28.44 on Nov. 8.
Chinese internet services firm Tencent was up 2%, near 27.25, in afternoon trading Thursday. It broke out of a cup-with-handle base with a buy point of 27.04 on Thursday. It’s traded over the counter in the U.S.
Short-message service Weibo was up 2.6%, near 55.60, in afternoon trading. In intraday trading, it reached an all-time high of 56.30.
Chinese e-commerce firm JD.com (JD) was up a fraction, near 30.25. Its U.S. shares cleared a consolidation period with a buy point of 29.33 on Feb. 10.
Rival Alibaba (BABA) was down a fraction, near 101.30, in afternoon trading. It has been forming a cup-with-handle pattern with a buy point of 104.67.
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