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Baidu, Inc. Message Board

  • s_guinepain s_guinepain Sep 27, 2010 12:37 PM Flag

    Technical Analysis. Serious responses only

    OK, before I start let me say that I love BIDU and I have made a lot of money with this stock for years. Let me also say that I expect a market correction before the end of the year that will eventually take the S&P below 950.

    Let's just analyze BIDU. The stock has run up 780% from $10 to $88 in 21 months which is spectacular but justified I believe. Then came back down to $76. Nothing unusual again.

    My problem comes from what happened in the last 3 weeks. After a 21-month advance of 780%, it is very suspicious for a stock to climb $26 (or 34%) in 3 weeks and actually climb above its upper trend line on a log scale. (the log scale part is actually quite important). This means that BIDU is actually accelerating its ascent.

    I refer you to Chapter 10 and 11 of William O'Neil's book "How to make money in stocks".
    After a large, long advance, when a stock accelerate its momentum and climb above its trend line on a log scale, it is time to sell. This has all the signs of a CLIMAX TOP.

    With the dreaded month of October coming, I think it is time to tighten up your stops.

    I am not telling you to sell but I do want to point out the possibility of a CLIMAX TOP in BIDU and other issues.

    What do you think?

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