Tim Reazor
Chief Investment Strategist
NorAm Asset Management
The Chinese search engine Baidu (BIDU) is entering a buy range. The stock, like others I’ve discussed lately such as United Rentals and Diamondback Energy, is in the upper 2% of the market fundamentally and technically. BIDU also sports a surging relative strength line and a positive up/down volume ratio.
I’ve wanted to write about BIDU for a few weeks but I’ve held off. I was waiting for institutional buying to drive the stock price higher. That kind of buying came into the stock on Monday for the first time in weeks. You should also note on the chart how low the volume is when the price pulls back. This demonstrates just how much conviction there is by the majority of shareholders. If BIDU was a weak stock with weak shareholders volume would escalate higher as price falls. Very few folks are currently selling when price dips which signifies conviction. You need this precise price and volume action for stocks to move higher.
Scaling into BIDU is appropriate at these levels. In an upcoming class I will cover how to properly buy and sell your stocks. I’m curious to see how BIDU acts at prior resistance of $189. If the stock acts well at this level I’m looking for a move to the $202 price level.
I hope today’s newsletter helped.
Best Regards,
Tim
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