Saturday, January 14, 2012

How can you mend a broken chart? (BIDU)

Looking at BIDU's daily chart (above), all the signs of a long term reversal are there. In fact it looks rather close to the "proper" shorting point according to O'Neil (for a reversal). From a bear's perspective there's pretty much nothing to not like here. I'd be surprised if it saw higher than $135 and below $110 would be a very clear break. If it does break, the symmetric triangle targets a ~$60 move but I don't see any support on the weekly chart until about $40. People forget how many times BIDU split as its momentum carried it higher. I don't know anything about the fundamentals of BIDU (and I really don't care to) but this chart sure says something big has changed

Disclosure: I don't have any position in BIDU but am net short the market. I may buy BIDU puts next week.

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