BIDU Update

BIDU has been, as you know from last night' post, a core short position since March/April of this year, the position is at a 19+% gain even with the counter trend move, which I used to add to the BIDU equity short as the position was about 2/3rds the size I intended.

If I was looking to start an equity short, I'd consider phasing in to BIDU here, maybe in 1/4 or 1/3 positions, however in my particular circumstance, I am full on that position so I'm looking for a Put position as I closed the Put opened on the 8/16 breakout on Wednesday and Thursday of last week, the first position making 102%, the second making 89+%even though the second half saw BIDU significantly lower, the volatility in the market and the time decay made the position worth less, this is why I have little tolerance for consolidations/pullbacks with option positions.

 For my purposes of a BIDU put, I'd like to see higher prices, even though I think BIDU is in a full Primary downtrend.

 BIDU is a great example of "From failed moves (head fakes) come fast moves". I suspect each break of resistance that saw an uptick in volume as stops were taken out also saw significant Market Maker accumulation, not by choice, but by law as any market order they can't match, they must provide a bid/ask for, they are the buyers and sellers of last resort. It may not be the case, but it does make sense to me that market makers were stuck with significant long BIDU inventory they may not have otherwise wanted. To rid themselves of that inventory they have to create demand to sell in to and it's out there, I have seen many talking about BIDU being in a trading range so buyers are out there.

 Here's where BIDU is currently hung up at some resistance, a break above that may create some demand, but making a higher high and changing the short term trend classification from down would also be helpful (yellow line).

 The 1 min chart is reflecting resistance in the area.

 The 2 min chart seems to indicate it's not that big of a deal yet and BIDU should be able to overcome it. I enter trades on signals, this is not a signal yet to enter BIDU, if I miss the trade so be it, but I'm not betting on BIDU, I'm using hard data to make choices.

 The 3 min trend in my opinion shows a positive divergence which BIDU has rallied from, that is on par with the supply the market makers would have absorbed.

 The 15 min chart is in line, the positive divergence is rather small here, meaning I don't think there's anything bullish going on in BIDU other than market makers trying to lighten their long inventory, remember though, they don't need to bring price up to where they were forced to take on the inventory, as a market maker they can go naked short and make the rest of the money up on a downside move, still the 3C chart should show that and thus for a options position I remain patient, for an equity short I wouldn't be opposed to dipping my toes in the water here. The yellow area is of course the head fake move sending BIDU down well over 14% in several days.

 At the hourly chart it becomes clear to me that BIDU is in a primary downtrend, having just seen a bear market rally. After the 1929 crash, the Dow went on to lose 86% over the next 2 years, but the first bear market rally gained well over 40% and another 4 followed that one, these are some of the most powerful rallies you will see in any market, they need to be to accomplish the reason they are there in the first place. Hindsight is always 20/20 but at the right edge of the chart, after years of a spectacular rally in the Dow, many don't want to believe it is over.

Very long term daily BIDU shows the 2009 accumulation, if you look carefully, BIDU hasn't even broken it's primary top yet, this has a lot of downside in my opinion, but it's not ready for a put position right here.