Daily Stock Report

Baidu Inc. - (BIDU) - June 2, 2022

It appears that a long-term downtrend in Baidu (BIDU) shares finally bottomed out about a month ago with a successful retest of $100 round number support. Since then, the shares have started to bounce back, retaking their 50-day moving average and snapping a short-term downtrend line. Most notably, this week, the shares have snapped a long-term downtrend line, signaling that a new recovery trend has commenced. 

Initial upside resistance may appear near the $150 round number, followed by previous peaks near $160, $170 and $180 on trend. Initial support appears at the 50-day average near $130.

With China’s economy starting to reopen, some Chinese ADRs have started to attract renewed interest, including internet and online shopping-related companies like Baidu (BIDU). After spending most of a year stuck in the red zone, BIDU has roared up the relative strength rankings in the SIA NASDAQ 100 Index Report and yesterday it returned to the Green Favored Zone for the first time since March of 2021. Yesterday it finished in 22nd place, up 9 spots on the day and up 63 positions in the last month. 

Baidu (BIDU) has been in a long-term downtrend of lower highs since March of 2021. In the last few days, however, it has started to show signs of life, completing bullish Double Top and Spread Double Top breakouts. So far this appears to be an upswing within an ongoing downtrend but currently the shares are bumping up against trendline resistance near $142.80 where a breakout would signal the start of a new recovery play. 

Should that occur, next potential resistance may appear near $167.30 based on a horizontal count, then the $175.00 to $181.10 area where a horizontal count, round number and downtrend line converge. Initial support appears near $129.30 based on a 3-box reversal. 

With a bullish SMAX score of 9, BIDU is exhibiting strength against the asset classes.   

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