Update: Dec 9, 2013 3:45PM
Signal: Continue Long (entry price = $158)
We hope you have been enjoying the 8.8% run on Baidu since the algorithmic buy signal on 11/26. This is a relatively new algorithm we are working with that uses dynamic calculations on each bar and therefore does not print a proprietary indicator, but it has been right on the money for us so far including an intraday algo we have running on Facebook.
From the chart pattern it appears that BIDU wants to go higher from here. It put in a new 52week high and is right in the middle of a strong upward regression channel it has formed since January. The current stop loss is a ‘disaster hedge’ in case markets completely fail, so it would be wise to tighten the stop to $162.26 lock in profit in case something disastrous does happen..
But we don’t see that happening with BIDU anytime soon. All China names are being bought this quarter and we’re seeing the same bullish algorithmic patterns in a lot of stocks, which goes to show you how distorted markets have become because last year you couldn’t give away Chinese company stock as everyone thought the whole country was going to blow up, but it didn’t and it put in a bottom, and now all of the really wealthy people who have benefited the most from QE need something else to put their money into so why not into a geo-sector that was so beaten down the only positive fundamental going for it was that it couldn’t go any lower?
We’ll ride this wave with BIDU and our current position with CH, but the portfolio is looking a little China heavy. We continue to scan all sectors and all countries for additional opportunities, but as we quickly tweeted this morning, “A number of algorithmic patterns that have worked well since June seem to be breaking down across the board. Possible EOY market cycle shift” – this doesn’t mean there aren’t opportunities, it means that new ones will start showing up very soon. Stay tuned…
BIDU – it wants to go higher