BIDU Update

BIDU is another I'm getting a lot of emails about, which is a July $110 call entered Friday. A lot of the questions revolve around adding to BIDU, I prefer not to. BIDU had a positive divergence out to 15 min, it looks like a decent short term bounce or relief rally candidate, but as the positive divergences son't reach out past the 15 min chart, I don't consider it to be a longer term trade, thus the July expiration instead of August.

Here's what BIDU looks like today...

BIDU has that same bear flag/pennant we are seeing everywhere. In the BIDU chart post from Friday I showed a chart similar to this and said,

"There's always the chance (even with BIDU moving up as I suspect) that we will see a downside break which sets up a bear trap. Recently with these price patterns the chances have been about 50/50 that there's a downside break first and then an upside breakout creating the bear trap. I'd estimate 10% of the time we see a Crazy Ivan which is a shakeout in both direction before the real move establishes itself."


So I'm not too concerned with BIDU right now, I don't think BIDU specifically broke to set a bear trap in this case, I think the market sentiment caused it, but I do think Wall Street will use it to their advantage.

 Even though the 15 min positive is quite large, it doesn't reach the 30 min chart. You can also see the break below support mentioned above from Friday.

 Intraday the 1 min chart showing improvement which is what I'd expect to see in the setting of a bear trap.

Check out the volume, you can see why it the break below support can easily be used as a bear trap and accumulated without drawing attention.

This is the largest volume in about 2 weeks as BIDU crossed below support, that's a lot of supply on the market at cheap prices.

 2 min intraday leading positive

 3 min leading positive today

5 min remains in leading positive position.


As to adding, I prefer to just give the trade some time to work, as mentioned when first entered, it is a speculative trade, I don't want to increase the trade size just to average down, unless that was specifically part of your risk management (to allow room for a break below support/bear trap), while I considered it to be a possibility, it was not part of my risk management planning.