Will Renren Run

Renren $RENN has been running downhill since its debut in May, from $20+ to $6.23. It’s trading at less than 1/3rd of its high on opening day. I am not surprised due to the overall market pulling back to major moving averages and support levels but the main reason is due to Chinese stocks taking a beating lately.

Several China based stocks have been scrutinized for faulty accounting and some shady government practices such as censorship. Renren takes that a step further due to a sudden resignation by a key board member before the IPO (this board member was the chief of its audit committee).

Renren is consider by many as the “Facebook” of China, with a population base at least 3-4 times grater than that of the United States. Renren is a social networking Internet platform in China that generates revenues from online advertising and Internet value-added services.

Revenues and total cash from operations have been increasing year-over-year but net income has not lived up to expectations. It does appear that the company has a boat load of cash and future earnings pan out as such:

FY 2011: -0.03
FY 2012: 0.03
FY 2013: 0.13

With all of that said, I wouldn’t touch this stock with a 10-foot pole since it doesn’t come anywhere near my technical criteria but something keeps pulling me back. I hope it’s not a gambling tingle but more of a hint of intuition knocking. I almost want to compare $RENN to $SIRI when it was trading in cents. $SIRI was crap and still wasn’t turning a profit but my intuition said to buy, at least a few thousands shares. I didn’t and now it’s up nearly 10-fold from that point. I know traders that did and have been paid off handsomely.

So Is RENN teasing me because of my SirusXM miss or is intuition correct again in telling me that this stock has been unfairly beaten down in a rough Chinese stock environment and overall market pullback?

Intuition says to grab shares and hold as a value/ rebound play. My “technical” rules say to STAY AWAY.
I think I’ll grab shares on Monday and tuck them away for a while.

Let’s see if breaking the rules comes back to haunt me. My leash will be slightly larger because my overall position size will be smaller than normal.

To give you an idea of a couple of stocks that my screens and rules are pointing me towards, check out $FIO and $BBRG. They are new IPO’s with earnings and sales growth with prices making new highs.

Let’s revisit all three in 3-6 months.

Stocks to Watch: April 3, 2011

This post contains weekly charts of several interesting stocks that I am following personally and on twitter (disclosure: I own shares in more than one). Each of the following stocks have been trending higher on above average volume.

$LOGM – 46.08
$MOBI – 12.85
$NXPI – 30.59
$SODA – 46.80
$SVN – 21.83
$MMYT – 30.99

Let’s see if the $DJIA and $COMPQ will cooperate by maintaining the up-trend. Both are showing some signs of exhausting but we’ll trade what the charts are doing, not what we think they may or should be doing.