Thursday, November 11, 2010

Bookkeeping: Adding to Baidu (BIDU) on Potential Breakout

While the market seems unlikely to do a repeat of yesterday and do a 180 degree turn and close at highs of the day, it also appears unwilling to break through the 13 day moving average.  Hence we have to keep playing the same song and dance and look for new opportunities in the melt up market, realizing we are playing with fire each day this market goes without any real pullback and consolidation.  One of these days this dip buying has to blow up in our faces, so one has to be cognizant of that.

Baidu (BIDU) has the look of a double top breakout, which is one of my favorite formations. After gapping up in late October it has been range bound and has been busy creating a base for 3 weeks.  Today it is poking its head over recent highs, and volume is huge.  Already a full day's worth in the first 2 hours.  Still too early to tell if this one is actually ready to go - a close over $115 or so would make me more sanguine.  If the market starts to reverse back up, this should be a leader and even if the tape does not worsen from here it should be ok.  If not today, we can wait for upside POMOrrow.

I have expanded the position by some 60% just over $114.20s.  We can see $108 is a very firm base on the downside, so unless we get a real selloff in broader markets that should be the near term floor.

Long Baidu in fund; no personal position


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