Baidu (BIDU) Rallies on News of Chinese Stimulus But Cycles Warn Investors

Steve Miller

Baidu’s stock price is moving higher on news out of China. Will Baidu’s stock (BIDU) continue higher? Or should active investors be cautious here?

On Sunday, the People’s Bank of China announced they would use reverse repurchase agreements to inject 1.2T yuan ($173B) into the economy to ensure ample liquidity is in the system.

The net impact after accounting for maturing short-term funds is around 150B yuan according to calculations from Bloomberg.

This sent stocks higher, including Baidu (BIDU).

Let’s see what the charts tell us.

Baidu (BIDU) Weekly Chart Grid

baidu stock price analysis bidu cycles analysis chart february 2020

At askSlim, we use technical analysis to evaluate price charts of stocks, futures, and ETF’s. We use a combination of cycle, trend and momentum chart studies, on multiple timeframes, to present a “sum of the evidence” directional outlook in time and price.

askSlim Technical Briefing: The weekly cycle analysis suggests that BIDU is in an intermediate-term positive pattern and due for a short-term correction. Weekly momentum is negative.

baidu stock bidu price technical indicators bearish decline lower february  year 2020

On the upside, there is an intermediate-term Fibonacci projection/target zone from 161.70  166.35. On the downside, there is an intermediate-term Fibonacci support zone from 120.39 – 114.01 followed by a lower Fibonacci support at 104.94. Our analysis suggests that for the bears to regain control of the intermediate-term, we would likely need to see a weekly close below 104.94.

askSlim Sum of the Evidence: BIDU has a positive intermediate-term cycle pattern with negative momentumGiven these conditions, we would expect any downside to be limited to the intermediate-term Fibonacci supports beginning at 120.39.

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Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.