Introducing a new long idea in Baidu (BIDU) to leverage a potential turnaround:
After breaking out earlier this year, BIDU pulled back and became oversold per the daily DeMARK Indicators® (not shown) and the weekly stochastics. Short-term momentum has improved, helped by today’s earnings reaction, which has resulted in an oversold upturn in the stochastics.
BIDU’s breakout above the weekly cloud was meaningful in that it ended a downtrend that had been in place since mid-2021. It was also associated with notable improvement in our long-term momentum gauges, with a monthly MACD “buy” signal supporting the apparent basing phase.
An intermediate-term upside objective for a greater relief rally in BIDU is ~$156, defined by strong resistance from peaks in June 2022 and February 2023. New cloud-based support of $123 can be used as a stop-loss threshold, ideally on a consecutive weekly (Friday) closing basis.
Baidu (BIDU, $130.06)
Target: $156
Stop-Loss: $123
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