Watch this short setup in Baidu (BIDU) (February 25, 2015)

Free Chart

Just real quick one here; Baidu ( NASDAQ:BIDU ), it didn’t hold the 200-day moving average. Boy, it sure looks like this is at support at 200.00, right? And maybe it is. However, I want you to be prepared for the fact that it may not.

Look at Moving Average Convergence/Divergence, MACD in other words. This is a trend indicator and a momentum indicator; when it’s below the midline here, which is the dotted line, when it’s below the midline that means, it doesn’t matter which way the line is actually going, when it’s below the midline then it is classified as a downtrend.

So then we go further and say which way are the lines pointing, what’s their configuration, etcetera, etcetera? The upshot is this, this is in a pretty nasty downtrend and unlike here where it really spiked down and then moved back up, this has just been kind of a drifting process here, this has been drifting down towards 200.00. My bet is this, if this stock does not hold 200.00, if it hits 199.00 it’s probably going to go a lot lower.

They don’t announce earnings until towards the end of April so you’ve got a while to go here. Let’s zoom out and look at the weekly chart; it could be a great buying opportunity but the way this stock has just kind of rolled over and with the rest of the market, like the NASDAQ Composite ( COMPQX ) is screaming; Baidu ( NASDAQ:BIDU ), it’s screaming too, more like moaning and groaning.

So I would just do this, set alert for like 200.00 maybe 199.50. If the stock breaks below that level I think you want to get ready to short this stock; because it will be below the 200-day moving average, it will have been unable to move back above the 200-day moving average and that is the stuff that like 170.00 and 160.00 is made of.