I already have a partial core short in BIDU that's at a slight gain, I've had it for a while and been waiting on the right time and area to fill it out, this is not dollar cost averaging as this position was opened as a partial position with the intension of adding to it and it's at a gain so if anything, it would be pyramiding up a short that's working.
BIDU I do see as a TREND TRADE and as such, I'd open this as a pure equity short. If there was a bit of a pop to the upside above the last few days's highs, then it might also be a decent put set up, but for a longer term position I prefer no leverage and I see BIDU as a longer term trend position.
I could wait and see if I can get a little better entry like $170, but I'm not making the AAPL mistake again, trying to cut too close to the bone and missing out on a big move.
Daily BIDU trends/cycle from base/accumulation at #1 to mark up or Trend at #2 and distribution/top at #3, this is actually a H&S top that has already put in the volatility shakeout. As many of you know, I'll only short a H&S at 3 places, the top of the head, the top of the right shoulder and after a break below the neckline and a rally back above it that shakes out all of the new shorts who entered on the break below the neckline. We are at the top end of that volatility shakeout in BIDU and you can see not only the larger negative divegrence (daily chart), but also the leading negative of the volatility shakeout above the neckline.
My X-Over Screen shows the volatility shakeout and is just about as close as you can get to giving a sell / sell short signal.
The Trend Channel has already stopped out BIDU, as I often mention, there's often lateral chop/volatility after a Trend Channel stop, but as far as capturing trend, it's the best method in my opinion as lateral chop may give some added gains, but it
is not trend.
The orange arrow is a 3-day Doji/Star reversal (bearish) candlestick which is a significant signal on a 3-day chart.
The 60 min chart shows the entire cycle from base/accumulation to mark-up to topping with a H&S top, the break below the neckline and volatility shakeout back above which is the last of the 3 places I'll short a H&S top, during this time 3C has done exactly what it should have.
C.T.R.=Counter Trend Rally or the Volatility shakeout.
On a 30 min chart we have essentially the same signals with a little more early detail as the faster charts pick up more. Note distribution through the entire H&S top.
As far as timing, the 15 min chart is starting to lead negative sharply which is migrating from shorter charts.
Like this 10-min or...
This 5 min that has its own mini-cycle with a "W" bottom.
3C is leading negative below the "W" bottom so we have significant distribution.
Intraday we are in line or maybe worse, I'm not inclined to sit around to see if I can get a better entry for a couple percent when we have such a strong overall candidate.
A stop can be placed above the H&S top, but not at an obvious place, I'd give it a little room, I'd much rather give it a wider stop with a little smaller position.
The great thing is you can pyramid up a pure equity short, see my article on "How to make more than 100% on a short".
The 3 min chart also looks right considering the migration from the 5 min on.
I'm going to fill out the equity short (no options/leverage) right here.
I REALLY like this as a longer term trending trade which means I likely won't treat it as a trading position, I'll just let it do its thing unless I see a major counter trend rally coming and after that re-enter short again.
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