As the stock market gains new momentum, interesting charts are bound to appear everywhere. Priceline.com (PCLN) and Baidu (BIDU) are two of many with interesting post-earnings patterns.
I covered the post-earnings set-up on priceline.com (PCLN) on August 11th (see “Priceline Not Likely to Recover Post-Earnings Losses In the Near-Term“). PCLN never closed below the critical $560 support line and is now bouncing in picture-perfect form. The charts below show the origin of the support line and then a close-up of the recent trading action.
I still think that this rally will end at the looming resistance from the 200-day moving average (DMA). Then again, if the market rally continues because of expectations of an imminent recovery in Europe, then PCLN could keep zipping along to close its post-earnings gap down ahead of schedule.
Baidu (BIDU) is even more interesting because it is already up 34% in just one month as the stock recovers from a 19-month (intraday) low. BIDU showed relative weakness as it continued to sell-off past the general market’s June low. Now, with the stock gapping up post-earnings and following through in a convincing fashion, it is difficult to understand what fear so gripped the market about BIDU earlier.
BIDU broke out above its 200DMA a week and a half ago on August 6th. The stock went nowhere until today. BIDU’s 2.7% gain breaks out from the mini-consolidation pattern and brings fresh life to the stock’s post-earnings rally.
Source: FreeStockCharts.com
Of the two stocks, BIDU holds the most bullish promise. Both stocks provide very clear stop loss points, but only PCLN becomes a short below that line ($560 for PCLN, 200DMA for BIDU).
Be careful out there!
Full disclosure: no positions