Weekly View and Elliott Count of BIDU Oct 27

Oct 27, 2009: 11:29 AM CST

With Baidu.com’s (BIDU) stellar $55 (12%) loss overnight (which is partially being recouped in today’s trading), let’s take a quick look at the weekly chart to find that the ‘damage’ so far was contained to the rising 20 week EMA, and then take a look at a detailed recent Elliott Wave count on the recent move off the late 2008 lows.

Baidu.com (BIDU) Weekly Chart:

We see that the 2008 lows near $100 per share were part of a three-phase “ABC” Corrective move – with the final move down being a horrendous drop from near $400 to $100 per share during the later half of 2008.

Price found a bottom and then has rallied all the way back to new all time highs on Monday… which were quickly erased (as if grasping at straws) overnight and into this morning’s trading day thanks to BIDU’s forward-looking earnings guidance.

What’s fascinating to me is that price opened AT the rising 20 week Exponential Moving Average, which is expected to be support in a rising trend… and so far price has bounced upwards off that level just as expected.

To be fair, a lengthy negative momentum (and – to an extent – volume divergence) has formed under price since the June indicator highs.  In powerful uptrends, price can overcome negative divergences, but eventually, these divergences are expected to ‘catch up’ with price in the long-run.

As long as price remains above the $350 level – the 20 week EMA – we can classify the intermediate term trend as up… but for a look at the daily chart along with a detailed Elliott Wave count (showing a grossly extended third wave which happens from time to time), let’s look at a chart from the new website Fibozachi.

(Click on Chart for Full-Size Image – courtesy Fibozaci.com)

Courtesy Fibozaci.com’s Technician’s Corner, I would suggest reading the entire post entitled “Baidu – Possible Top:  Long-Term Elliott Wave Count.

What interests me most – beyond the extended third wave – is the final “Bearish Rising Wedge” or – in Elliott Terms, the “Ending Diagonal” which is a known pattern that is correlated (but never guarantees) market (or stock) tops, as indicated in the article.

Fibozachi notes that price can often be expected to ‘eject’ out of the rising wedge (or ending diagonal) 75% of the way to the apex, which is the point in which the converging trendlines meet – BIDU appears to be at that 75% line prior to today’s morning decline.

This is just another interesting, deeper level technical take on the current structure of BIDU.

Let’s keep watching to see how far this support bounce of the 20 week EMA will last and see if this indeed is the peak for prices for this powerhouse of a stock.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

6 Comments

6 Responses to “Weekly View and Elliott Count of BIDU Oct 27”

  1. terlyn Says:

    This is what I see with QQQQ as well. What do you think?

  2. Corey Rosenbloom, CMT Says:

    Technology stocks – BIDU is considered China's Google – do tend to travel together, and yes, BIDU shares a very similar rise as QQQQ off the 2009 lows.

    I wouldn't call it a 1 to 1 relationship but I would be watching for resistance and a steeper pullback in the NASDAQ and QQQQ from here as a more likely probability than continuation of this massive run-up without a meaningful pause.

    I'll try to follow-up with a post on the NASDAQ.

  3. * Fibozachi * Says:

    Thank you for highlighting our work alongside your own Corey, it is an honor.

    After opening today at 355.71, just .50 above the daily 89 EMA at 355.21, by 12:35 pm BIDU continued to play moving average pinball by spiking all the way up to 388.20, just .70 above the hourly 377 EMA at 387.50 (using a Worden TeleChart data feed). Turnover ran at 593% of the 3 month daily average today as price gapped decisively below the trendline that connects [iv] of 3 and 4. This marked change in temperament within BIDU’s price action is a textbook example of how not only Elliott Wave Principle but also Elliott Wave Theory can be successfully employed by technical analysts in anticipation of long-term inflection points.

    ** Designer note ** Data feeds between charting platform providers are notoriously different and as a result you may not register the same values across platforms and feeds. This is especially true for exponential moving averages (EMA’s). An EMA includes a smoothing factor in addition to including all of the price series data for the entire life of the trading instrument under analysis, where every single bar’s data affects each new calculation. Ultimately, the weighting assigned to each bar of EMA data continually shrinks as a new average is continuously calculated; yet, each individual datum point captured remains forever part of a derivative function within the EMA. For this explicit reason, slight differences between varying data feeds continually expound upon themselves, amounting to slightly different values for long-term interval periods of time, tick or volume (especially time) across charting platform providers.

    With a Tweezer Top Bear Engulfing candle shaping up on the weekly and our personal favorite candlestick pattern, a High Wave, currently established on the monthly profile, we at Fibozachi suggest shifting any previously long-focus towards one of selling corrective upward rallies. All that said, while we believe that yesterday marked an historic inflection point for shares of BIDU, anything is certainly possible and our opinion is just that.

  4. * Fibozachi * Says:

    Thank you for highlighting our work alongside your own Corey, it is an honor.

    After opening today at 355.71, just .50 above the daily 89 EMA at 355.21, by 12:35 pm BIDU continued to play moving average pinball by spiking all the way up to 388.20, just .70 above the hourly 377 EMA at 387.50 (using a Worden TeleChart data feed). Turnover ran at 593% of the 3 month daily average today as price gapped decisively below the trendline that connects [iv] of 3 and 4. This marked change in temperament within BIDU’s price action is a textbook example of how not only Elliott Wave Principle but also Elliott Wave Theory can be successfully employed by technical analysts in anticipation of long-term inflection points.

    ** Designer note ** Data feeds between charting platform providers are notoriously different and as a result you may not register the same values across platforms and feeds. This is especially true for exponential moving averages (EMA’s). An EMA includes a smoothing factor in addition to including all of the price series data for the entire life of the trading instrument under analysis, where every single bar’s data affects each new calculation. Ultimately, the weighting assigned to each bar of EMA data continually shrinks as a new average is continuously calculated; yet, each individual datum point captured remains forever part of a derivative function within the EMA. For this explicit reason, slight differences between varying data feeds continually expound upon themselves, amounting to slightly different values for long-term interval periods of time, tick or volume (especially time) across charting platform providers.

    With a Tweezer Top Bear Engulfing candle shaping up on the weekly and our personal favorite candlestick pattern, a High Wave, currently established on the monthly profile, we at Fibozachi suggest shifting any previously long-focus towards one of selling corrective upward rallies. All that said, while we believe that yesterday marked an historic inflection point for shares of BIDU, anything is certainly possible and our opinion is just that.

  5. After Looking Strong BIDU Begins Falling off a Cliff | Afraid to Trade.com Blog Says:

    […] I last covered Baidu in my prior update:  October 27 Weekly Chart Update and Elliott Count on BIDU. […]

  6. After Looking Strong BIDU Begins Falling off a Cliff | Penny Stock Trading System Blog Says:

    […] I last covered Baidu in my prior update:  October 27 Weekly Chart Update and Elliott Count on BIDU. […]