Alibaba Group Holding Limited (NYSE:BABA) breaking out as trade progress between the U.S. and China hits the headlines again

Alibaba Group Holding Limited (NYSE:BABA) breaking out as trade progress between the U.S. and China hits the headlines again

Alibaba Group Holding Limited (NYSE:BABA) breaking out as trade progress between the U.S. and China hits the headlines again

Chinese stocks are breaking out as trade progress between the U.S. and China hits the headlines again.

The FXI China large-cap ETF soared more than 1% on Monday, adding to 2% gains seen at the end of last week.

“The charts have definitely seen some notable recent strength, but I don’t know if they’re just out of the woods yet,” J.C. O’Hara, chief market technician at MKM Partners, said on CNBC’s “Trading Nation” on Friday.

O’Hara said one of the top Chinese stocks could be ready to break out, but it needs to clear one critical level.

“Let’s take a look at Alibaba. If you go back over the last 12 to 18 months you do see a series of higher lows in place, and that’s definitely positive, but there’s still a series of lower highs,” he said. But, “until we see Alibaba break above $185 — that will, in essence, create a new high — I’m a little cautious here.”

If Alibaba can move above that level, O’Hara said, it’s a straight shot back to highs not seen in more than a year.

“We get positive above that $185 level because above $185 we think there’s a clear shot to the 2018 highs at $210. So that’s why I turned incrementally more positive, so first [we have to] watch $185 and then we’ll see where we go from there,” he said.

Alibaba needs to rally more than 3% to reach $185. It would need to move 18% higher to reach $210.

John Petrides, portfolio manager at Tocqueville Asset Management, says the group as a whole is beginning to look more promising.

“We think the large-cap tech social media giants in China are quite attractive particularly over the long term,” Petrides said during the same segment. “They generate a ton of cash flow, the demographics are in their favor and … in September the risk was that the U.S. may delist Chinese securities. That does seem to be behind us, which I think provides a valuation opportunity.”

The FXI ETF trades at 8 times forward earnings, significantly cheaper than the 17 times multiple on the S&P 500.

Technical Indicators

Overall, the bias in prices is: Upwards.

By the way, prices are vulnerable to a correction towards 171.23.

The projected upper bound is: 189.97.

The projected lower bound is: 170.02.

The projected closing price is: 179.99.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 21 white candles and 28 black candles for a net of 7 black candles.

A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.

Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 55.3980. This is not an overbought or oversold reading. The last signal was a sell 2 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 58.80. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 63 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 120.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 4 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 15 period(s) ago.

Rex Takasugi – TD Profile

ALIBABA GRP ADR closed up 3.230 at 179.690. Volume was 164% above average (trending) and Bollinger Bands were 12% narrower than normal.

Open     High      Low     Close     Volume___
179.990 182.400 178.020 179.690 7,676,276
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 175.26 173.39 172.56
Volatility: 25 37 37
Volume: 3,116,218 2,580,894 3,232,293

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

ALIBABA GRP ADR is currently 4.1% above its 200-period moving average and is in an upward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect moderate flows of volume into BABA.N (mildly bullish). Our trend forecasting oscillators are currently bullish on BABA.N and have had this outlook for the last 4 periods.

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