BIDU

The correction we witnessed in November was small, declining only 3.69%. Even though the correction was small and painless, I’m glad I stayed on the sidelines. This rule of thumb is the only way to prevent major losses during a large correction. During the correction leaders changed hands and stocks hit buy points, LULU and INFA to mention a few. LULU and INFA are the first two stocks I analyzed on this blog. LULU is up 14.6% and INFA moved forward 5.62%. This week I will be writing about BIDU.

BIDU is China’s largest search engine. Some people refer to it as the Google of China. Its chart is currently making what William O’Neil calls a flat base. A flat base is a second base usually forming after a cup with handle. The characteristics to look for are horizontal movement and decreasing volume. Generally it takes five to six weeks of flat sideways movement to form. Currently BIDU’s price is at $109.23 and its buy point is $115.14. Remember look for increasing volume of 40% or higher and a price increase of 2%. At this point the follow through day has arrived and institutions are buying large quantities of the stock. When you buy after the follow through day there is an 80% chance the stock will increase.