KongZhong (KONG)

Company

" KongZhong Corporation is a leading provider of wireless value-added services and also operates one of the leading wireless Internet portals in China. The Company delivers wireless value-added services to consumers in China through multiple technology platforms including wireless application protocol (WAP), multimedia messaging service (MMS), JAVA, short messaging service (SMS), interactive voice response (IVR), and color ring back tone (CRBT). The Company also operates a wireless internet portal, Kong.net, which enables users to access media and entertainment content directly from their mobile phones." (company website)

KONG 3-month stock chart

Buy

23-Aug-06. Shares of KongZhong peaked in May after reporting earnings, then fell into a deep swoon (see sidebar). The August earnings report injected life into the stock with a solid jump on higher-than-normal volume, and the chart is improving strongly. It is testing the 50-day moving average. Will it break above it? I surely do hope so!

  • Price momentum (PPO) — steady increase over 6 weeks
  • Trend (ADX) — strong, and buying pressure (+DI) has crossed above selling pressure (-DI)
  • Money flow (CMF) — was flowing out, but now neutral
  • Relative strength (RSI) — has gone from weak to neutral
  • Volume — high-volume jumps after earnings

Sell

gain Bottom line
4%

15-Sep-06. I parted company with KONG, taking a small profit. KONG did, in fact, break well above the 50-day moving average, getting as high as $8. Unfortunately it is faltering: momentum (PPO) is dropping; buying pressure (+DI) is falling; money (CMF) is starting to flow out of the stock; and relative strength (RSI) is pointing the wrong way. Fearing that it will fall to the lower Bollinger band (in a typical oscillation between the bands), I decided to take whatever profits I could.

KONG 1-year chart
KONG 1-year chart