In a post earlier this week - Baidu.com, Inc. (BIDU) Challenges the 300 Level...Again we saw that shares of Baidu.com were challenging an important level. The stock has now completed a successful push through that mark as the company is set to report earnings next week on April 24. Here is where BIDU currently stands.

Chart Courtesy of Thomson Financial

The stock is up after both the earnings report from Google (GOOG) and this news hit the wires. This leaves the shares pushing in on a short-term overbought condition but that former resistance near 300 should now be viewed as support.

The focus of my post earlier this week was on the resiliency near resistance and I pointed to the put/call ratio as a sign of skepticism and said - "few seem to betting on a breakout. In my experience, the breakouts tend to happen when no one is really expecting them." The question now becomes whether the company can impress the Street with their report. According to data from Thomson Financial, the stock has shown the ability to post some fairly big moves after earnings.

This table shows the returns a day, a week and a month after Baidu.com has reported. The most recent report was fairly quiet in terms of the subsequent action while the October report brought quick gains that evaporated by the time the report was a month old.

Overall I think the technical action looks encouraging but I think the key to watch now is how the option activity builds as the earnings report nears. That will give a hint as how optimistic/skeptical the Street is. As a contrarian I prefer to see expectations remain low but the most important issue will be whether the company can deliver.

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