Thinking about buying Baidu (BIDU)? Not so fast. (November 02, 2016)
BIDU
A real quick video on Baidu ( NASDAQ:BIDU ). The market is in, lets just say, distribution mode; Baidu ( NASDAQ:BIDU ) is no different. The company reported earnings, obviously they weren’t really attractive because the stock is selling off. What I would suggest doing is this (lets go through it real quick): The weekly chart; this is not a stock that is working really on any level. Stochastics, not working there. In fact if anything it is just showing more of a down move. On the daily chart you look at this and say, “Okay, I want to buy Baidu.” My first question would be, why do? Exactly why is that? And honestly, I don’t think you could give me a reason. I don’t think you could give me a reason, that would pass the straight face test, why you want to buy Baidu ( NASDAQ:BIDU ). So lets do one that does pass the straight face test.
This stock has been, other than this big sell-off here, basically through 2016 the agreed upon minimum price for Baidu ( NASDAQ:BIDU ). Buyers and sellers get together, they take a poll and decide that the lowest price that this stock is going to go is 160.00. If it gets down there everybody decides they want to be buyers. That is literally the way you have to look at these charts. We look at this now, it is 169.00. We say, “Alright, still not where I want it to be, but I really want to buy Baidu.” Set a price target at like $160.53. If the stock gets to there you buy the stock and then you keep a stop just a little bit below that level. Now, how did I come up with 160.53? I just made it up.
The bottom line is, you want to be looking at these general levels of support as just that, general levels. They are not tried and true, hard and fast support levels here, they are just general levels. So if you want to be buying Baidu ( NASDAQ:BIDU ), for whatever reason, you put a stop a little bit underneath the agreed upon low price for the stock. And if you don’t want to buy Baidu ( NASDAQ:BIDU ) now you are talking. Then you can look at some of the other stocks that are actually shortable, like Amazon ( NASDAQ:AMZN ), Google ( NASDAQ:GOOGL ), several others, definitely not Facebook ( NASDAQ:FB ) tomorrow, don’t be doing that. But Amazon ( NASDAQ:AMZN ) and Google ( NASDAQ:GOOGL ), totally shortable. I will be working on that stuff tomorrow morning in the forum.
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