Alibaba Group Holding Limited (NYSE:BABA) came under pressure in 2018, partly due to concerns about the trade war

Alibaba Group Holding Limited (NYSE:BABA) came under pressure in 2018, partly due to concerns about the trade war

Alibaba Group Holding Limited (NYSE:BABA) came under pressure in 2018, partly due to concerns about the trade war

Alibaba (NYSE:BABA), like many Chinese and technology stocks, came under pressure in 2018, partly due to concerns about the trade war. And in the past few weeks, the strengthening U.S. dollar and reports of a potential cooling of the Chinese economy have added to the uncertainty surrounding BABA stock. Amid all of this pressure, BABA stock has tumbled 20% in the past year.

However, since China’s move to a consumption-based economy is here to stay, long-term investors may want to consider investing in Alibaba stock, especially as the company’s earnings, due to be announced on Jan. 30, approach. I believe that the slowing down of the Chinese economy may become a blessing in disguise, as it may prevent a full recession and keep the growth of the country and its online retail sector at sustainable levels.

The Fundamentals of BABA Stock Are Robust

BABA has become a highly regarded global company, and Alibaba stock offers U.S. investors the chance to invest in the growing Chinese consumer and e-commerce markets.

As BABA gets ready to release its quarterly results at the end of the month, investors who are seeking capital appreciation should keep in mind the company’s dominant position in the Chinese e-commerce space and the rapid growth of its e-commerce business. Moreover, BABA’s gross margin is over 55%, and many analysts expect its revenue to continue growing at double-digit-percentage rates.

The fact that the company is not highly leveraged also contributes to my upbeat view of Alibaba’s management and balance sheet. Its current ratio, which measures BABA’s ability to pay its short-term debt, stands at a healthy 1.4.

Although the Chinese economy may slow in 2019 or 2020, China’s growing middle class will continue to drive increases in the country’s consumer spending. The sales of China’s online retail market, which is growing rapidly, are likely to expand particularly quickly.

BABA also has multiple equity stakes in growth companies in other industries such as Alibaba Cloud, its cloud computing arm; Ant Financial, the Chinese payments giant; and Ele.me, the local delivery company.

Overall, the bias in prices is: Upwards.

The projected upper bound is: 164.04.

The projected lower bound is: 139.69.

The projected closing price is: 151.87.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 26 white candles and 24 black candles for a net of 2 white candles.

Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.

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 93.6946. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 7 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 59.13. 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 10 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 164.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 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 4 period(s) ago.

Rex Takasugi – TD Profile

ALIBABA GRP ADR closed down -0.230 at 151.690. Volume was 21% below average (neutral) and Bollinger Bands were 9% wider than normal.

Open High Low Close Volume___
149.790 152.020 148.890 151.690 3,735,488

Technical Outlook
Short Term: Overbought
Intermediate Term: Bearish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 141.52 146.89 171.03
Volatility: 55 54 44
Volume: 3,426,231 4,625,580 4,259,608

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 11.3% below its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of BABA.N at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on BABA.N and have had this outlook for the last 16 periods.

The following two tabs change content below.
HEFFX has become one of Asia’s leading financial services companies with interests in Publishing, Private Equity, Capital Markets, Mining, Retail, Transport and Agriculture that span every continent of the world. Our clearing partners have unprecedented experience in Equities, Options, Forex and Commodities brokering, banking, physical metals dealing, floor brokering and trading.

You must be logged in to post comments :  
CONNECT WITH