You have to trade China's internet services giant Baidu (
) hard, and last night's release tells you why.
[caption id="attachment_61700" align="alignright" width="300"
caption="Baidu campus, China"]
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 (
) is going through similar issues but without the same competition
for search that BIDU is starting to see from Qihoo (
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