Baidu Stock Takes Off As China's Tech Sector Soars On Stimulus, Regulatory Cloud Lifts: What To Watch

Baidu, Inc BIDU was surging over 8% higher on Thursday on the alignment of a number of positive catalysts affecting the stock.

At the Quantum Create 2022 conference in Beijing, the Chinese multinational technology company announced the launch of its first superconducting quantum computer and world's first all-platform quantum hardware-software integration solution.

Macro events have also helped to boost Baidu and a number of other China-based stocks recently.

The Chinese government aims to boost growth through a new economic stimulus package. The effort will aim $1 trillion yuan ($146 billion U.S.) at infrastructure, in an attempt to combat the economic turndown caused by years of COVID-19 lockdowns.

Although the stimulus package is good news for the Chinese sector, the recent surge in Baidu may be due to news the U.S. and China are close to a deal to allow U.S. regulators access to audit records of China-based companies listed on U.S. exchanges.

If the agreement comes to fruition, the risk of China-based companies being delisted from New York exchanges will be lessened. 

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The Baidu Chart: On Thursday, Baidu gapped up above the 200-day simple moving average (SMA) on the daily chart, which flipped the stock into a possible bull cycle. The 200-day SMA is a bellwether indicator that usually acts as heavy support and resistance during regular trading hours.

The move higher on Thursday negated a fairly consistent downtrend in which Baidu has been trading since July 7, but the stock hasn’t yet confirmed a new uptrend is in the cards.

In order to confirm a new uptrend, Baidu will eventually need to retrace and print a higher low above the low of $127.05 printed on Aug. 18.

Thursday’s surge caused Baidu to completely fill an upper gap between the $147.04 and $150.96, which was left behind on July 11. The stock now has a lower gap, however, between $140.97 and $143.15, which is about 90% likely to fill in the future. Bullish traders would prefer to see the lower gap filled when Baidu retraces to print a higher low.

If Baidu closes the trading day near its high-of-day price, the stock will print a bullish kicker candlestick, which could indicate higher prices will come again on Friday. If the stock falls lower intraday to close the session with an upper wick, lower prices may be in the cards.

Baidu has resistance above at $155 and $163.58 and support below at $146.39 and $136.43.

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