China Yuchai International (CYD)

Company

"China Yuchai International Limited ('China Yuchai') is a Bermuda holding company which owns 76.4% of the outstanding common shares of Guangxi Yuchai Machinery Company Limited ('Yuchai'). China Yuchai provides certain management, financial planning and other services to Yuchai and has designated two senior managers to work full-time at Yuchai's primary manufacturing facilities in Yulin City as part of Yuchai's day-to-day management team." (company website)

Translation(?): "They make stuff."

Buy

18-Aug-06. This is surely the most risky of today's buys. CYD has been in a long downtrend (see sidebar), but it has come up about 20% from the bottom earlier this month. That recovery puts the stock on the verge of breaking above the short-term trend line. The company reported earnings on August 11, followed by a big price jump.

• Price momentum (PPO) — sharply increased
• Trend (ADX) — weakening, but that reflects the drop in selling pressure (-DI)
• Money flow (CMF) — has been flowing out for past three months, but is improving
• Relative strength (RSI) — improved from weak to neutral
• Volume — high-volume price jumps after earnings

Sell

20-Sep-06. "On the verge of breaking" is not the same as "breaking." Despite glimmers of hope from time to time, it became clear that CYD is just following the 50-day moving average down. My regret is that I didn't sell yesterday when it above $5.75 instead of waiting for a standing stop-loss order to trigger at $5.50.