Now on to Day Two on this long tailed cat. (July 18, 2012)

by DAN BIDU 
I’m Dan Fitzpatrick at StockMarketMentor.com on Wednesday, July 18th. Just a quick follow up on our Baidu ( $BIDU? Baidu.com, Inc. (ADR) ) trade. This turned out to be pretty solid trade; I noticed one of our members was trading this with options and he did quite well, I forget the percentage, but it was more than the 2.35 percent the stock moved up, and it was really for a quick of flipper, a 59 minute trade that I teach. Anyway, so what do we do now? It looks to me like the market, on Thursday morning, is going to get more upside, so we can get more of a move higher on Baidu ( $BIDU? Baidu.com, Inc. (ADR) ), and I would say though, respect the trend, but also respect your profit. What I mean by that is, the trend is down, no matter which way you draw this line, the trend is down. Just look at the twenty period here, the twenty day moving average, the middle Bollinger Band, that’s not too far above where the stock is now; we’ve also got the three day rule in effect, in my view anyway, its a rule of thumb; which means that the real smart guys buy in the first day. By the way that was you and me right? The semi smart guys buy on the second day; that would be some folks who wanted to wait and see whether Baidu ( $BIDU? Baidu.com, Inc. (ADR) ) was indeed going to bounce, so they’ll be buying tomorrow, and then finally, on the third day, the folks who waited too long are going to be buying; those are always the most poorly capitalized traders because otherwise they’d be buying on the first day and their accounts would be bigger. That’s really a pretty good rule of thumb on these big moves down, these big reversals. So my suggestion would be, as I noted, protect your profits, if you’re still long keep in mind that this was a short term call, I’m not going to go back, so first of all let’s look at the weekly. Okay, this, as I noted, looks like a rocket that is losing trajectory and now falling back; so I promise you that two months from now or three months from now, if this turned out to be the ultimate bottom in Baidu ( $BIDU? Baidu.com, Inc. (ADR) ) and Baidu ( $BIDU? Baidu.com, Inc. (ADR) ) kept going up, I’m not going to point to this video and say, “See I called the bottom”; I’ll leave that to other guys who tend to revise what they said to suit whatever subsequent moves the stock makes. What I’m telling you is, I look at this as, you know, effectively a day trade, a short term snap here, if you’re long and the stock continues to move higher, just respect the trend, up down, up down, up down and then up; not this kind of move, that is not my kind of trade, I would say right around here is where you want to be taking your profits, or at least keep a trailing stop on the position, at least keep a trailing stop on the position. So guess what? That’s all I’ve got to say about that. Members I’ve got some of the Buzzin’ Dozen that we’re looking at as well as some other stocks that are actually doing quite well; which I pointed out in my post this morning about not missing this market because there’s a lot of things to actually like about it even though the news flow really stinks, so get over there right now.

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