Baidu Inc (BIDU) Breaks Out -- But Not Everyone's a Fan

Baidu Inc (ADR) (BIDU) is recovering from losses suffered earlier this week

Jul 17, 2015 at 2:28 PM
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Chinese stocks are bouncing back after suffering steep losses earlier this week. A prime example is Baidu Inc (ADR) (NASDAQ:BIDU), which has popped 5.2% to trade at $200.07 -- thanks to a rebound in China's equities market and a record-setting run for the broader Nasdaq Composite (COMP). Based on recent option activity, not everyone will be happy with this move north.

During the last 10 weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), BIDU has racked up a put/call volume ratio of 0.70. This ratio is higher than all but 10% of similar readings taken in the last 12 months, indicating traders' appetite for bearish bets over bullish has grown strong.

This stands in stark contrast to sentiment among the brokerage crowd. Of the 11 analysts tracking BIDU, eight have assigned it a "strong buy," compared to three "hold" ratings and not a single "sell." What's more, the stock's average 12-month price target of $244.46 is 22% above current trading levels.

On the charts, Baidu Inc (NASDAQ:BIDU) has struggled over the long term, shedding more than 12% of its value in 2015. Meanwhile, today's rally is stalling out near the $200 century mark, which corresponds with the security's descending 60-day trendline.

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