BIDU Unpredictable Event Makes It Too Scary To Buy…For Now

Posted by Timothy Sykes on Sat 29th of Dec, 2007 02:12:40 PM

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In my latest AOL video , you’ll hear me recommend (Nasdaq: BIDU) as a good buy. It’s the Chinese Google and with a $10 billion marketcap, it’s valued highly, but since its growing like gangbusters and profits have been strong, I still thought it could go higher, especially if Facebook can be valued at $15 billion.

But, today, the company announced their CFO has died in an accident. While this is very sad, traders must look to what this means for the stock. Luckily, my AOL video came out after the market close, so there’s still time for me to take back my recommendation. Which I’m doing right now. This stock is already so volatile, I wouldn’t be surprised to see it tank $50 or more Monday. Even if it bounces (as I anticipate many people saying that kind of a move is an overreaction), it’s still a perfect double top in the $420-$430 range (which I previously expected it to break through, becoming a nice breakout play).

You gotta remember Wall Street is all about perception, and the rumors that have already started swirling (ex. was he “killed because he was going to come clean”, why was this news not announced on Friday since he died on Thursday, he looks like a young guy so was this really an accident? etc.) will give the 2.75 million shares short some confidence and make more than a few buyers nervous, even if they are all most likely false.

Also, since it’s a somewhat private matter, I doubt the company will be too forthcoming with all the details (unless the stock really gets hammered). So this is a particularly scary situation — it’s probably best to stay on the sidelines as this stock is going to show everyone the meaning of volatility. I’ll look to buy on a dip when the volume/volatility settles down and if it forms some nice sideways price action.

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Determined to teach others this PennyStocking trading strategy (learn more HERE), he went back to his original $12,415 roots (already $27,000 even though the stock market is down 20%!) to show everyone how to turn thousands into millions, even while having a life (somewhat) and making plenty of mistakes.

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