Why E-Commerce China Dangdang Inc. Stock Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of E-Commerce China Dangdang  (NYSE: DANG  ) were up as much as 10% today on what appeared to be largely momentum-driven buying.

So what: Chinese e-commerce stocks have been soaring this week thanks to JD.Com's successful IPO last week and excitement for Alibaba's upcoming debut. Shares of JD.com are up more than 30% from its IPO price of $19, and traders seem to be rotating in and out of different Chinese e-commerce stocks -- yesterday Jumei International Holding, another recent IPO, soared 20%.

Now what: Chinese online retail seems to be the latest hot growth sector, as not even half of China's population is online and the category is expected to grow 27% in this year alone. Dangdang has long been a volatile stock, so investors shouldn't be surprised to see wild swings on essentially no news. Still, Dangdang is coming off a poorly received earnings report, and as a former online bookstore it might not be the most promising stock in the bunch. Investors may want to consider some of the newly public companies or Vipshop Holdings, which has seen its shares rise more than 2,000% in the last two years and continue to improve.

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