I really like Chinese gaming company Perfect World (PWRD) from a fundamental perspective; after selling off from its guidance after a very good earnings report [May 19: Perfect World - Good Earnings, Light Guidance - Buying the Dip] the stock spent a few days in purgatory before making a nice rebound. However, at this point technically we have some technical resistance ahead, both the 50 and 200 day moving averages lie ahead; the 50 day in the $26s and the 200 day around $27. Honestly this is as perfect of a setup as you could ask for from a technical perspective. Sell now right below resistance areas, and rebuy either (a) on a move over $27 or (b) on a pullback. So I’m executing the first part of that strategy (sell) here around $26.20… then for the second part (buy back), if the stock shows strength we’ll pay up maybe around $27.50 and get the position back or on a pull back to lower to mid $20s we’ll do the same buyback. Temporarily I’m cutting this position back from a 1.1% stake to 0.2% stake awaiting a move either way by the stock. Due to the higher expenses and 3 days lost for national mourning due to the Earthquake this stock might have some overhang over it, but it’s a lot of consternation over nothing in my view.

[May 20: Motley Fool on Chinese Gaming]

Long Perfect World in fund; no personal position

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