Thursday, December 22nd, 2016

A stock named BIDU

Yes that is a beast, a stock, and a monster stock, a mover and account killer at the same time. Those of you familiar trading this beast you know this has been a great year for you. Last year touching this stock the wrong way meant getting your account banned from trading if you were thinly capitalized. BIDU is the Chinese equivalent of our mighty Google. Though fundamentals have been stellar this stock has tendencies to sell off viciously often 20 points at a time wiping out many accounts.  However this year it has been behaving nicely with a solid uptrend and low volatility. Stock has moved up since January 2009 and still going strong. Many people thought its run is over as it made new highs and may crash, but that looks like a short sellers wet dream.  Lets take a look at BIDU chart given below, please click to enlarge.

Bidu chart

BIDU has a 45 degrees solid up trend line from March lows and it was recently broken. Its has managed to touch its trend line  4 times and also touching its 50 day moving average at the same time. Than it went on to form an Adam & Adam double top in October and November. Traders started wondering if that’s it for BIDU and its run is over. But to everyone’s amazement including mine ( I cleared out my positions nimbly) it  refused to budge  even in weak markets. There were no 20 points sell offs  and vicious bear attacks.  Nothing. The stock started moving into a well defined channel as with the rest of the market including $SPX and $RUT.

Bidu 2

Bidu started moving into the channel and than broke down suddenly as it  has its beastly qualities intact  but couldn’t dive any further in this trading market. It hit its 50 day moving average and bounced off nicely.

If you follow Investors Business Daily and William O Neil’s teaching a stock coming to meet its 50 day moving average on a pullback is a swing traders dream. Lots of traders got long here yesterday and today. Whenever a stock pulls backs like this it presents a great opportunity and a great entry point, specially if the Stochastics ( at the bottom of first chart) are oversold. Looking at its uptrend and the trend line this presents a great opportunity  to enter either as a trader or an investor.

Looking at this ripe opportunity here is the trade I have devised for our subscribers.

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