Sunday Night Views: BAIDU and the S&P

Good Sunday Evening Survivor Capitalists...

I'm presenting here just a couple of ideas on the S&P 500 and Baidu, that crazy Chinese search engine that appears to have a monopoly in its market.

S&P 500: The bottom line is that the stock market took out 1150 decisively and therefore that level becomes shorter term support for bulls. After doing the wave analysis, I have found that 1140 is actually a better wave support point. So, from this perspective, it makes little sense to hold bearish bets until either a) the market breaks down below 1140; or b) the market displays a clear "impulsive" pattern lower on the intra-day (30-60 min.) chart. On a related technical note, I saw this article on S&P technicals. This gentlemen identified the main points we discussed on last week's S&P report as a reason for a 1225 target. I'm not sure what to make of the fact that these concepts are making it to the CNBC headlines....

I've also included a look at Baidu (Ticker: BIDU) because this is a most interesting "bell wether" stock. It basically encapsulates all the juicy "story" lines of the entire equity rally: CHINA, TECHNOLOGY, INTERNET. What could be a better story than a Chinese internet search engine? And now, with Google leaving the space, BIDU is apparently left with little competition. All of this should be "awesome" news for the BIDU bulls, and from a "fundamental" perspective it very well might be. However, this is a good time to remember that fundamentals and news are always universally positive at the END of bullish trends, and BIDU has thusfar failed to recapture the "blow-off" high from the day of the Google announcement. The Wave Analysis suggests perhaps one more push higher before the wave pattern concludes. I think BIDU will have a very difficult time bettering the $629 peak.

Baidu Report 20 Mar 2010


Warning: There is some Wave Theory discussion in the beginning of this report where I explore some ideas about the nature of "corrections," and how they might be becoming much more "complex" than has been previously thought.

18 comments:

CV said...

Thanks Andy...

I'll be back in a bit here ladies & gents...

Today I was out at the farm power washing the decking... It's like the damn Swiss Family Robinson out there, there's so much decking...

So what does CV do... he finishes (after 3 hours), and packs up the power washer to come back to MD and do these decks...

Get back around 3:30 (and flip on TV to see the MD-Mich St. game update)... What's on TV? (From last channel left on the other day)...

THE EFFIN SWISS FAMILY ROBINSON!

You can't make this stuff up people... Anyway, I caught the end of MD-Mich St. (what a game at the end)... AND... Finished power washing these decks too...

Gotta Fantasy Baseball draft to get to now, but I'll be back in awhile...

call me ahab said...

karen & I-Man -

from previous thread- forgot to send a shout out thanking you for the Pilates tip-

isn't that where they use those unusual wooden machines- very medieval-

also- it's cool that they have flat screens in all the barber shops now- was watching the Mich St/MD game and getting a new coif at the same time!

if Purdue wins we have 3 out of 8 Big 10 representation-

37.5%- not too shabby-

karen- re the Galbraith article- kind of skimmed it- but his mantra for some time has been "deficits don't matter"-

not sure if I buy that- it's one thing to deficit spend in bad times- another thing entirely to deficit spend in good times AND bad times-

it would seem it could not last indefinitely- if only to instill some faith in the currency- but what do I know

call me ahab said...

andy-

what of the flip side-

where Google's departure shows the weakness of China- an insular country with no basic freedoms-

might it send a danger signal to all technology companies who want to compete in that space- that not only does China not value freedom but will gladly steal your technology w/ impunity-

and what of the countries where the tech company is headquartered-

could it not lead to trade restrictions because China does not truly have open markets- but only a market open to those willing to self censor?

luv the gold trend said...

Andy,
I think the whole idea of corrections becoming more "complex" is so critical to EW analysis. The market is a poker game and we have to recognize that as more people adopt a certain strategy or method, you have to adapt and change your strategy in order to win.

I was reading Prechter's original EW book the other weekend and i noticed that he counted the wave up from the 1974 lows as a five wave move (and thus a 'primary wave 1' advance) *eventhough* it was a 'truncated fifth wave' per his view. For some reason he couldn't view the whole period from '66 to 82' as a correction and thus counted the '82 to '87 advance as a thid wave rather than a first (and the rest is history ...). I think Prechter is a genius, but it adds further proof of his unwillingness to change his mind. I can also see that he refuses to consider that EW is 'adapting'.

Side note: i read Lewis' 'The Big Short' this week-end. Seriously good read.

Steve

call me ahab said...

wow-

wild- this article hit on my very thoughts on my 6:40 post-

http://online.wsj.com/article/SB10001424052748704454004575135313221347420.html?mod=googlenews_wsj

mcHAPPY said...

http://www.bloomberg.com/apps/news?pid=20601087&sid=aWBkvoZ4mGEE&pos=5

There you have it. We're back. Shine on you crazy diamond.

mcHAPPY is starting to think 1200's on the S&P is quite possible. Actually hope it does grind it's way up there, nice and slow. Put the bulls to sleep and then start the long slope of hope.

call me ahab said...

Purdue pulls it out in OT-

Big 10- .75 out of every 2 teams- lol

DL said...

From the businessweek article cited above:

“Fibonacci analysis is based on a formula developed by … mathematician Leonardo da Pisa…who discovered the sequence while studying the reproduction rate of rabbits”.

***************************************

Had no idea all this fuss was based on rabbit procreation.

call me ahab said...

DL-

the way I understand it- it is a formula that permeates through the universe-

maybe

but there may be something to how the whole universe is put together- a mathematical constant that we- as living beings in the universe- are drawn to-

maybe

DL said...

Ahab,

Rabbit f**ing is not quite as inspiring as, say, E = MC2

Mannwich said...

On another note, I toured the new Twins ballpark Target Field yesterday. Very impressive. It's smaller than I thought it would be, which is great. Most seats are very close to the action. State of the art too and several bars/restaurants/warm areas where you can still watch the game in the event of inclement weather. Looks like they did it right to me. As a partial season ticket holder, I'm looking forward to the season.

Mannwich said...

Futures down early. I wonder if this HC bill looking inevitable gives Blanky and friends cover to take the market down for a while? ;-)

Either way, I'm sure that will be the headline tomorrow if the market does tank - "Market Drops on Health Care Passage Fears".

I think Monday's going to be first big down day in quite some time.

Andy T said...

Luv the Gold Trend.

Yeah, in re: Prechter et al. I'm fairly new to the whole wave counting thing (just 6 years now), but I've definitely come to the conclusion that waves adapt and market structure changes. It seems obvious and unavoidable in some respects...

2small2bail said...

C - from previous thread ... usually, it's I-Man alerting us to a new one from the "#1 political prisoner" ... what to make of this ...

"As Europe weakens, the Dollar, Dow & Gold would rise. When the debt concerns then turn to the US, the dollar will get hit only then."

MA 3-page handwritten note

Granted he doesn't say at the same time, but it seems implied - and, that's a head scratcher given the (mostly) inverse relationship of the $ and stocks today, no?

CV said...

@Andy

It would seem to me that waves WOULD, IN FACT, stand the test of time... Even in the face of artificial intelligence...

Computers, after all, ARE programmed by humans...

@2small2bail
I-Man IS usually the first one on the new MA scribbles... But it is TRUE that CV has been a MA follower for more than 6 years now...

Hugh Hendry was actually the first one, I heard, talk about MA (back when I used to watch CNBC Europe, in EUROPE)...

@Jeff - Typical HC... I think Andy has it right in the charts (and has had it all along)... We'll take a LOOK SEE around 1140...

McFearless said...

My .02 on the waves.

1. I'd say it is very human for us to try and trivialize the importance of phi because it's so much bigger than any one of us. Pisa did the thought experiment about rabbits breeding patterns to "discover" phi but if you do more study of The Golden Ratio you'll find it's been puzzling humans for a lot longer than that. Even though it's Fibonacci that always gets the credit, he wasn't really the first person to discover this number. I like to think of phi as organized chaos because of the fractal nature of it. I also think many of Einstein's Theories will be proven incorrect in the fullness of time. If we want to discuss adaptation, or what we might describe as evolution, I still think the spiral is the more appropriate shape, not the circle, a constant. Pi represents the latter, Phi the former. Markets do not adhere to physics.

2. Then the questions become can humans adapt to that chaos and ALTER it. In other words, can phi be broken by human want and desire? I don't believe anyone is creating a compelling enough argument that this is fact but I'm open to hearing why people think it's happening. Sometimes I think of it in a "bigger" way, could humans change the basic building blocks of a spiral galaxy, which also adhere to phi.... I think not, but the very nature of fractals tell us that if it could be changed at the smallest level, the same should also be able to be said about something at much larger degree. E wave has been applied to stock markets for less than 100 years. The formula embedded in e-wave is a part of everything, not just rabbit breeding, it has been around.....technically, forever...however we define that. I've said before that our own site illustrates to me that the basic Elliot Wave structure can't be materially changed as we will all never count the pattern and then take action on it in the exact same way. As for the squiggles, over time I think that many people will be able to add valuable "tweaks" to e-wave and how it "works" short term but as I've seen Andy say before, nature eventually takes over and the pattern reveals itself. I also consider what phi represents...a spiral, something that is ever expanding, and that I hardly think we fully understand after a few decades of attempted application.

One thing is for sure, it will never stop being interesting.

Perhaps in another 1,000 years the net population will apply this in a more advanced way.

@Steve,

re: RP's bottom count from 74, over the years he's given a lot of reasons why he's done it that way, and in some (no, a lot of) cases I've often thought he was stretching to make that count fit, like counting the index priced in gold, for example.

I have heard him state in the last few years something like "depending on where you want to count the bottom"

On another note....so, healthcare......

Some Historians credit the Plague with ushering in modern medicine and the end of "other" forms of treatment, a time when 1/3 of Western Civ. died.

Today being personally healthy is thought to be a natural condition, an entitlement we are born with in the United States, one that only a bad doctor can mess up. I think this speaks volumes about the social mood. I'm reminded that Medicare and Medicaid were also launched at the TOP of trends in social mood and therefore the markets in the 60's. I don't think events like this happen mid-trend.

Everyone have a great day.

Bruce in Tennessee said...

Banks were also weaker, as Greece's debt situation remained a concern. Credit Suisse (CSGN.VX), UBS (UBSN.VX), Barclays (BARC.L), Deutsche Bank (DBKGn.DE) and BNP Paribas (BNPP.PA) fell 0.5 to 2.3 percent.

Greek bank shares .FTATBNK were down 2 percent, with National Bank of Greece (NBGr.AT) down 2.6 percent, EFG Eurobank (EFGr.AT) down 2.6 percent and Bank of Piraeus (BOPr.AT) off 2.8 percent.

At the weekend, European leaders sent out conflicting signals over aid to Greece, with Germany's Angela Merkel urging Athens to solve its debt problems alone and Italy's Silvio Berlusconi strongly backing European Union support. [ID:nLDE62L02D]

Greece's share benchmark .ATG lost 1.7 percent.

Across Europe, Britain's FTSE 100 .FTSE slipped 0.6 percent, Germany's DAX .GDAXI dropped 0.5 percent and France's CAC 40 .FCHI eased 0.6 percent.


...I thought, and still think that it will be hard to get the strong man of Europe to go for the Greek bailout thingy...and Italy is all for it...imagine that!

Going to be a rough few months in my opinion. Taxes are going up. The shift to larger government will cost the average Joe Clueless in his pay voucher.

I also see Britain has advised the population to expect a lower standard of living. Gordon must not like winning elections.

CV said...

MONDAY THREAD UP

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