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Quick Take: Baidu Buys Up China's Internet

NEW YORK ( TheStreet) -- After a lackluster first six months of 2013, Baidu (BIDU) catches a strong bid after it announced a $1.9 billion deal for 91 Wireless. T3Live.com's Scott Redler and TheStreet's Debra Borchardt break down where the stock will go next.

91 Wireless is the top app store in China, suggesting that Baidu is trying to make a push into the mobile space.

With shares up about 7% in early trading, it's clear that investors are cheering the move and see new potential.

But what do investors and traders do with the stock now?

Although it was one of Wall Street's darlings for several years, the stock has been in a deep downtrend since mid-2012 on speculation that the company had nothing to differentiate itself. Now it appears that it's changing course.

According to Redler, if Baidu can hold the gap that was created when the stock jumped from $101 to $106, then it will likely be worthy of an entry on the long side.

While he doesn't recommend chasing the name, if it can consolidate near these levels, the next move should be up.

As for resistance, he is watching $115 as his first target and $125 should the stock really start chugging to the upside. The key is whether today's levels can hold as support and only time will tell if that's the case.

-- Written by Bret Kenwell in Petoskey, Mich. .

Bret Kenwell currently writes, blogs and also contributes to Robert Weinstein's Weekly Options Newsletter. Focuses on short-to-intermediate-term trading opportunities that can be exposed via options. He prefers to use debit trades on momentum setups and credit trades on support/resistance setups. He also focuses on building long-term wealth by searching for consistent, quality dividend paying companies and long-term growth companies. He considers himself the surfer, not the wave, in relation to the market and himself. He has no allegiance to either the bull side or the bear side.

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