Stock Technical Analysis: A Closer Look at SOHU (Sohu.com Inc)

I’ve covered SOHU a few times in the past (here and here), so you’re aware that I follow this stock by now.  As many have been paying attention to the recent break out, SOHU has gained significant momentum in the past few days.  Well, today was a bit different with indecision kicking in.  First I sold my Oct 70 Call when I saw the double top form intra-day (see below).

SOHU Intra-day 5 mins Chart

Then when I saw the stock reach below $71, I switched gear to Oct 70 Put.  Unfortunately, I ended up getting stopped out, breaking even from this trade as SOHU recovered toward the end.  Looking at the technicals closely, you will see that it bounced off of the prior resistance of ~$69.50 level twice (Wednesday/Thursday), which it broke out from now acting as a support.

SOHU Daily Chart

If you look at the 3 yr weekly chart, you will see that SOHU has indeed broken through a strong resistance and now acting as support.

SOHU 3yr Weekly Chart

So what do I conclude from this?  Even though today’s near Doji pattern suggests SOHU could be approaching the top for now, SOHU can still go some ways if this support still holds, and it has so far.  However, if the overall market starts to lose steam from here, as many are speculating, this could end up in a failed breakout tracking the overall market.  I’m still bullish here, but with very tight stops as the market continues to be over-extended and SOHU tends to move up or down very rapidly.