BIDU Long Term Trade Set-Up

This is one of those stocks that has generated a lot of interest, but hasn't generated a lot of good opportunities, right up until this week I haven't seen anything that was really interesting.

Things have changed a bit. I'm not sure if BIDU can bounce, you'll see why in a moment, but if it can even a little, this "New Normal" Double Top, looks to be a very interesting longer term trend play.

 A true double top is a large, longer term price pattern like this, they tend to round between the two tops rather than have a sharp "V" shape. It use to be a double top (like bottoms) would fall short of the former extreme (high for a top, low for a bottom) or in this case, resistance, but after 100 years of the same, Wall St. found a way to use TA against traders as it became more popular, thus the head fake move was born and it can be difficult to tell the difference between a real breakout and a head fake move. If you look at the money flow via 3C (Money Stream shows the exact same thing on this daily chart), the probabilities are very high that this is a head fake move, the break above resistance creates demand for longs which creates an opportunity for sellers to dump large positions in to demand and higher prices. 

The head fake move tends to be proportional to the price pattern which is almost a 3 year top in this case.

 On a 2 hour chart you can see the last 3 stabs at resistance look like they have all seen increasing distribution at the top near resistance.


 The 60 min chart shows the same thing with more detail as it should, but we haven't had much to work with beyond these longer underlying trends.

 Now we are seeing 15 min charts start to set up as the same head fake move that saw distribution in the broad market saw it in BIDU as well.

When Wall St. dumps their positions, they are pretty indiscriminate.

 More interestingly, the 5 min chart is showing a divergence set up for an upside run that again was used to sell in to.

This is possibly the break we've been waiting for. Although BIDU didn't see the same market/price action this week, it did see near term distribution which is the same time as the broad market this week. This is why I'm not sure if BIDU can or will bounce, but a little move above the last 3 day's range and it looks like we have a good entry/set-up for a short equity position as well as a put position, we just need to confirm short term chart distribution in to any such move. I've set my alerts.

Ironically, BIDU was one of the best examples of a short trade that we patiently stalked and let it come to use, we entered 1% off the highs and made a nice gain over the next 3 months as it headed lower, it was the perfect example of a low risk/high probability trade, there's a good chance BIDU does it again for us.