This morning news hit the wires that Google may almost certainly leave China and shut down its Chinese search engine. The direct beneficiary of such a move would be Baidu. Google’s share price fell and Baidu jumped.

A few weeks ago I read some analyst saying that the possibility for Google leaving China is about 30%. Today you can read it is 99.9% and of course it is clear for everyone that big G would have not retracted its threat (or promise). As usual, after the news is out, people fool themselves and others and pretend that they had known everything beforehand.

But trading is a game with possibilities and nothing is for certain. That is why stocks fluctuate and it demonstrates that relative to the ubiquitous self confidence almost nobody knows anything.

I also remember an analyst saying that Baidu’s stock is worth $500 with Google staying and $600 with Google leaving China. He even deduced from these fictitious numbers that the chance for Google pulling out of China is 50%, because Baidu’s stock was priced at $550 then.

Interesting – given that Google trashed all its competitors elsewhere, and that after coming very late to the party, one should think that BIDU would have been headed not to $500 but more towards the penny stock zone in the adverse case. Now Baidu has the chance to capture the bulk of Google’s 35% market share of China’s search volume, adding to its own 60%.

Here is another perspective: Baidu’s stock swung down 75% and then advanced about 400% during the last 20 month, just to tunnel through the financial crisis. A price difference of only 20% for getting the big competitor out of the way?

Anyway, after prospects are materializing, this is a good day for Baidu. Its monthly chart shows that it has a stronger growth rate but less stable earnings than Google. The stock has seen a huge up-move last year. It is expensive, but the growth outlook of the company is good, as it now has much less to fear the tech giant grinding it to the bones, slowly but steadily.

What are the prospects for Google’s stock? They have not much changed today. Google makes only a tiny fraction of its revenue in China. If management thinks it should go ahead with its bold move, it is likely good for Google’s business in the long run. However, the stock market sees that differently, at least for now.

Google in the morning of March, 10. It came two weeks late to the ongoing index rally.

The monthly chart shows what Google execs admitted already quite some time ago. The stellar growth phase is over and the stock price didn’t move substantially higher since 4 years. The revenues curve (blue) lost its frenetic pace 2 years ago. Quarterly earnings (pink) are growing solidly and witness a stable margin situation. This is the earnings curve of a market leader.

Lately signs of looming problems with various regulators around the world became stronger. Google itself decided to leave China unless current censorship will not get lifted. This was a proactive move, perhaps to demonstrate power to all authorities in the world indicating that Google will not accept every arbitrary decision ranging from copyright to privacy questions without threatening back. It has been seen also as an attempt to dispel privacy concerns of its users. Or was this mainly a marketing action to get positive headlines supporting the Google Phone launch?

So, there are some problems, but still, Google is a growth story.

You are just reading the welcome message for my new quoTrader blog. This is the start of a journey into uncharted terrain for me and it is also an experiment.

While I do have some experience in creating static web sites, this one will be my first blog and probably the only one I am willing to put energy into. It feels a bit strange to finally become a blogger myself as being sociable is not my very nature. So, I am not sure if social media is the right thing for me. But perhaps I will find my own style for this blog over time.

Otherwise I am a trader, mostly stocks, with a technical inclination. Outside of the markets I am a programmer, physicist, and later in the evening I presume to think that I am also an inventor. Don’t ask now what are you inventing and expect to get an answer other than “excuses to this question”.

What to expect than from quotrader.net? For one, I plan to write about the usage of the quoTrader system in conjunction with pinpointing current market chances. Reflections about software and other trading systems may also be possible. Ideally this blog should give its readers some value that is directly translatable into making money in the markets. Ha, you already guessed that, right?

But it is also an experiment. I am absolutely unclear about how publishing trading ideas will affect my own trading. My hope is that an area where I found I could improve my own operations, the longer term investigation of trading candidates, will benefit from this writing. In other words, I expect or hope for a more disciplined and systematic approach in my preselection of stocks to trade. Not that I don’t know already how to find them, I know exactly what I have to do. The problem is more the continuous and thorough work, which is needed to stay connected with the market in the search for stocks with current potential.

Luckily for my blog, this is a problem of so many. Just have a look at which stocks are traded in what situations. All of them are traded all of the time! And every buyer faces a seller. Amazing – most people seem to miss that there are only a few interesting situations. Sure, there are big investors like fonds who have to play a different game. But at least you, the small private trader or trading investor, should concentrate on the current hot spots of the market.

So, how to make use of this site? I am not offering trading signals, but trading ideas. If you want to trade these, you should have a system for finding your entries and exits. This blog puts the focus on stocks with an outlook above average, which should help every trading strategy. Preferably you could use the quoTrader system, but others may also be adequate. I don’t plan to discuss this system here detailed but piecewise. If you are interested, there is only one way to comprehend it – read the complete eBook.

But, whatever you do, keep in mind that this system, site and blog is from the desk of a procyclical trader, someone who is trying to get on board of fast moving targets. That means everything can only work with using tight stops. Embrace stops, and you may become a prospering quoTrader.

Good luck in the markets,
Martin Wirblat