August 6, 2011

  • BIDU has given a bearish engulfing pattern in weekly chart.
  • Price managed to close above its 20 week moving average. But the Bullish technical setup has suffered some damage. 
  • Next dip below 20 week moving average may take the stock to lower bollinger band in weekly chart.
  • Shorts are safe to hold on till it stays below 20 Day Moving Average. MACD has given a good sell signal following negative divergence. One can spot negative divergence in MACD Bars. So at higher levels stock may face selling pressure.
  • Having said that the major trend in weekly chart is still up. So Close above 20 Day Moving average can be kept as stop loss for shorts.
  • Netflix having broken its 50 Day Moving average is moving towards its 200 Day Moving average.
  • Price is also showing an important trend line break in weekly chart.
  • 200 DMA is around 222, Weekly line chart is showing support between 228 - 235 levels.
  • Stochastic indicator is showing oversold readings, But price has not shown any reversal sign yet.
  • If stochastic line stays below 20% line one can stay short. Since Stock is oversold one should look for bullish reversal candlestick patterns or break and close above 20 day moving average to go long.
  • Conclusion: Stay short below 5 day Low EMA.
  • S&P 500 Week took support at the cloud. And this seems to be working in favor of the bulls. But towards the close it closed flat giving no major gains to bulls and bears.
  • Daily chart shows it might reverse the trend. But one need to look at 30 minutes time frames to see if the trend is changing in shorter time frames.
  • 50 period moving average and cloud in 30 Minutes is yet to be captured by bulls so these levels will act as resistance on a reversal attempt.


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"All through time, people have basically acted and reacted the same way in the market as a result of: greed, fear, ignorance, and hope. That is why the numerical formations and patterns recur on a constant basis."
—Jesse Livermore