BIDU Update

Yesterday many members emailed me with great gains they made in BIDU calls, there were gains that were doubles and in only an hour or two of open trade, many made 50-80%, as we have many different traders, some took all their gains, some took their initial investment and let the profit run, I decided in yesterday's BIDU update that I would put aside the 55% gain in BIDU and wait it out as I expected BIDU to make a bigger counter trend move after setting up the bear trap we expected.

" I probably should take some off the table here, but I'm expecting more of a counter trend move so I think I may just hold a bit longer and see how the position fares."


Here's what BIDU is looking like this morning and so far I feel ok about my decision yesterday.

 Yesterday's closing daily candle and the high volume is a signal I often talk about that is associated with a reversal, however it indicates nothing more than a reversal, meaning it just tells us probabilities are high that there won't be a follow through the next day or at least on the open. We have no way of knowing if the reversal is going to go from up to down or even sideways, if it will last a day or is a major turning point, or in fact if it's just an opening reversal (that's the rarest), it just tells us the forward momentum is likely to halt the next day (although it works on almost any timeframe).

 On a 60 min chart BIDU is pulling back to the support line of the descending triangle that turned out to be a bear trap, note the last candle is a very small doji star, this candle is indicative of a loss of downside momentum and is often associated with reversals (meaning an hourly candle reversal to the upside).

 The trend of the 15 min chart is very positive and one of the reasons I suspected the bearish descending triangle price pattern would be a bear trap as you can see it was in the yellow area, also this is the reason I expect BIDU to put in more of an upside move, even though long term BIDU is one of my core shorts and long term I expect more downside.

 Interestingly as BIDU has been pulling back on a 1 min chart, 3C has been putting in a positive divergence.

 This has migrated to the 2 min chart as well.

And the 3 min chart, so I'm ok with still holding the Aug. $110 BIDU calls to see if it can't move higher as I expect from the 15 min chart's trend.