Kick Baidu while it’s down

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You have to trade China's internet services giant Baidu ( BIDU , quote ) hard, and last night's release tells you why.

[caption id="attachment_61700" align="alignright" width="300" caption="Baidu campus, China"] Image courtesy of hwanghsuhui: http://commons.wikimedia.org/wiki/File:Baidu_Campus2.jpg [/caption]

First off, any BIDU release has volatility attached to it.

Over the last 13 quarterly releases you either made on average 6.9% on moves higher playing earnings, or lost 3.7% on average on moves lower over the last 10 quarters.

Today the stock is set to open down hard. Heard this story before? BIDU has to continue to invest in its growth and this will hurt at the margin. The iQiyi online video business and mobile internet solutions are great -- but with a price, and meanwhile the competition gets stronger.

Note - Google ( GOOG , quote ) is going through similar issues but without the same competition for search that BIDU is starting to see from Qihoo ( QIHU , quote ).

The stock is in great value territory but we have heard this throughout tech (see Apple). With 18x 2014 earnings, BIDU is hardly expensive but the multiple is falling and could go lower.

Technically, BIDU also has major sell signals until you go down and test the December lows, which would be a great place to add stock. Ref Close confirmation today is likely. Look for BIDU to be range-bound and re-test the December lows. Target? TD prop down exhaustion 90.505 TDST 88.80 & TD Risk 85.11.

The TD indicator refers to Thomas DeMark Sequential .



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , International , Stocks

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