Baidu.com, Inc. (BIDU +$23.60 or +5.54% to $449.78) rose to its 3rd highest close ever today as a considerable gain backed by nearly 2 times average volume lifted it further above its 50-day moving average (DMA) line. Its slump below that important short-term average had raised concerns since getting extended from more than +5% above its pivot point from the latest "double bottom" base pattern. It had triggered a technical buy signal and was featured in yellow on 1/13/10 as it cleared the 12/29/09 high mentioned in the prior evening's note (view all notes).

Gaps often indicate substantial institutional activity.  Today's considerable gap up and close near the session high was a sign of great institutional accumulation. However, this company's chart is loaded with numerous gaps in in either direction in recent months.

The company is due to report earnings after the close on February 9th. It has a stellar sales and earnings history that satisfies the C & A criteria.  It is reassuring that the number of top-rated funds owning BIDU's shares rose from 103 in Dec '08 to 193 in Dec '09, solid evidence its shares were being accumulated by the institutional (I criteria) crowd. 

Always follow all key criteria of the investment system to stack the odds of success in your favor. In a bullish market environment, many ideal buy candidates come along.  Right now, disciplined investors are waiting for a new confirmed rally before initiating any new buying efforts.  Meanwhile, the M criteria presents a problem, since 3 out of 4 stocks typically follow the direction of the major averages.