China Stock Baidu Could Make a Quick Comeback

There's a lot to digest on Baidu's stock chart

by Josh Selway

Published on Apr 9, 2018 at 2:10 PM
Updated on Jun 24, 2020 at 10:16 AM

The recent global trade tensions have weighed on China-based Baidu Inc (NASDAQ:BIDU), with the shares falling from around $270 to their current perch of $226.56 in less than a month. This pullback could be a buying opportunity, however, based on technical data -- and past BIDU performances. Take a look at the chart below.

bidu stock today

As you can see, the shares have pulled back near their 320-day moving average, emulating price action seen back in early February. Data from Schaeffer's Senior Quantitative Analyst Rocky White says similar pullbacks to the 320-day moving average over the past three years have yielded a one-month rise of 7%, on average, with a 67% win rate. A similar move this time around would put the security just above $241.

Baidu's Fibonacci retracements are also worth mentioning. The $230-$233 is especially noteworthy, home to a 61.8% Fibonacci retracement of the equity's run from its July bull gap to the October record high near $275. You can see how the shares snapped back to this region after the early February retreat, and how it's acted as both technical support and resistance in recent months.

BIDU has been a good performer for premium buyers during the past year, based on its Schaeffer's Volatility Scorecard (SVS) of 85. In short, this shows it has a tendency to make bigger moves than the options market has predicted. Even so, open interest is low, ranking in just the 35th annual percentile with 240,308 contracts open.


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