Chinanet Online Holdings, Round 2 (CNET)

If you missed the triple-digit gain on Chinanet Online Holdings Inc. (NASDAQ:CNET) the first time around, this may be your second chance. While there's sure to be plenty more volatility in the cards for CNET, that volatility so far has been predictable enough to make - and save - some pretty good money.

Yes, this is the same stock yours truly advised getting bullish on CNET back on September 18th when it was trading at $1.10, only to turn right around on the 19th and recommend selling it at $2.41 for a 119% gain. That was never the plan, but circumstances and a triple-digit winner in hand were good enough reasons to change the plan with Chinanet Online Holdings.

As it turns out, the exit was a day early; Chinanet Online Holdings Inc. went on to hit a high of $3.98 the next day. Still, a 119% score in one day isn't anything to sneeze at. Besides, while CNET went much higher the next day, the risk/reward ratio from that point was greatly altered for the worst. Never even mind the fact that the stock did end up pulling back to a low of $1.30 yesterday.

So why is it back on the radar now? Simply put, today's action from CNET suggests it's getting back into a bullish groove. Take a look.

As harsh as the selloff was, interestingly, it was never on particularly high volume. This tells is there wasn't necessarily a lot of real bearish interest at work, but rather, just a lack of buyers at that price that wanted to risk catching a falling knife. Too much of anything is still too much though, and once the environment and the price changed enough with Chinanet Online Holdings, would-be buyers would become actual buyers, and the tide would turn to something more compelling. Today's 48% is clearly something encouraging; the strong volume (in just the first half hour of the day, no less) says the overt trend and the undertow are both turning decidedly bullish.

While it's too soon to expect the same-sized rally we saw in September this time around, it can't be ruled out. Regardless of how big any gain from here is apt to be, we know CNET has just logged a decisive V-shaped reversal and is pointed higher. Whatever's in the cards should be big enough to merit taking a shot now that the bulls have tipped their hand.

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