Alibaba Group Holding Limited (NYSE:BABA) caught in the crossfire of escalating trade tariffs
Alibaba (BABA) has been caught in the crossfire of escalating trade tariffs and ramping up of rhetoric from administrations in both the U.S. and China. I warned regarding the possibility of this situation in my article on 13th November 2016: ‘China Wall’ can hurt Alibaba more than anticipated. Alibaba saw a dip of almost 15% within a few weeks of the presidential election. However, it was able to deliver over 80% growth in 2017 as the new administration focused on other policies. This growth was backed by better growth within the core commerce segment and the potential of cloud and international commerce segment.
In order to forecast the probable result of the current trade spat between the U.S. and China, we need to have a perspective about the past negotiating results. The recent USMCA deal between the U.S., Mexico, and Canada was also finalized very close to the deadline as the stakes for both the U.S. and Canada increased. Similarly, the agreement to lower tariffs with the EU was reached after months of rhetoric. When the possibility of an all-out, tit-for-tat tariff by the U.S. and EU seemed imminent, the European Commission President visited Washington and both sides agreed to halt new tariffs and negotiate. We can forecast a similar last-minute trade deal between the U.S. and China. This would remove the bearish sentiment on Alibaba’s stock and allow it to trade on the fundamentals.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
By the way, prices are vulnerable to a correction towards 166.74.
The projected upper bound is: 153.95.
The projected lower bound is: 132.91.
The projected closing price is: 143.43.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 17 white candles and 33 black candles for a net of 16 black candles.
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.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 48.2831. This is not an overbought or oversold reading. The last signal was a buy 1 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 35.01. 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 1 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 -85. This is not a topping or bottoming area. The last signal was a buy 1 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 6 period(s) ago.
Rex Takasugi – TD Profile
ALIBABA GRP ADR closed down -3.130 at 144.160. Volume was 12% below average (neutral) and Bollinger Bands were 53% wider than normal.
Open High Low Close Volume___
144.810 145.690 142.300 144.160 3,917,622
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 150.31 165.67 183.35
Volatility: 54 42 41
Volume: 5,769,395 5,181,359 4,187,997
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.
ALIBABA GRP ADR is currently 21.4% 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 9 periods.