Alibaba Group Holding Limited (NYSE:BABA) Currently Undervalued with Strong Growth Potential
No Delisting BABA Stock
It’s no coincidence Alibaba’s all-time highs in January coincide almost perfectly with the signing of the phase one trade deal between the Washington and Beijing.
As soon as the worst of the trade war and coronavirus outbreak headwinds had passed, Alibaba was hit with additional bad news. In late May, the Senate passed the Holding Foreign companies accountable Act (HFCAA). The bill would require Alibaba and all other U.S.-listed Chinese stocks to verify they are not controlled by the Chinese government. Alibaba would even have to submit its financials to Public Company Accounting Oversight Board’s (PCAOB) audits for three consecutive years.
A lot of U.S. investors are freaking out about a potential delisting of BABA stock. I say it’s unlikely to really happen.
First of all, losing Alibaba and other Chinese stocks would cost Wall Street stock exchanges, brokers and investment banks millions of dollars. They would lose trading fees, underwriting fees and other income.
“Wall Street will be lobbying to try to block it, because it makes loads of money off of listings of Chinese corporations within the United States,” Harvard law school professor Jesse fried said.
Fried said the House might not even bring the bill up for a vote. Voting against it would make representatives look weak on China. However voting for it might anger their deep-pocketed Wall Street donors. I feel people may be underestimating how much of an impact the investment community has on U.S. politics. When it becomes clear to investors that baba stock isn’t going anywhere, it may trigger a relief rally.
ALIBABA GROUP HOLDING LIMITED is a holding company that provides the technology infrastructure and marketing reach to help merchants, brands and other businesses to leverage the power of new technology to engage with users and customers to operate.
The Company operates four business segments. The Core Commerce segment provides China retail, China wholesale, International retail, International wholesale, Cainiao logistics services and local consumer services through Taobao Marketplace and Tmall.
The Cloud Computing segment provides complete suite of cloud services, including database, storage, network virtualization services, big data analytics and others.
The Digital Media and Entertainment segment provides consumer services beyond the core business operations. The Innovation Initiatives and Others segment is to innovate and deliver new services and products.
Shayne Heffernan Trade Idea
“Our current price target of Alibaba will come in around $259.09 which will give the stock a price increase of +15.90%.”
Overall, the bias in prices is: Upwards.
Note: this chart shows extraordinary price action to the upside.
By the way, prices are vulnerable to a correction towards 209.12.
The projected upper bound is: 237.09.
The projected lower bound is: 211.01.
The projected closing price is: 224.05.
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 22 white candles and 28 black candles for a net of 6 black candles.
A long upper shadow occurred. This is typically a bearish signal (particularly when it occurs near a high price level, at resistance level, or when the security is overbought).
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.
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 85.1920. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 5 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 61.70. 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 sell 107 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 117.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 5 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 buy 11 period(s) ago.
Rex Takasugi – TD Profile
ALIBABA GRP ADR closed down -0.710 at 223.540. Volume was 49% below average (neutral) and Bollinger Bands were 8% wider than normal.
Open High Low Close Volume 223.890 226.000 222.940 223.540 2,124,886
Technical Outlook Short Term: Overbought Intermediate Term: Bullish Long Term: Bullish
Moving Averages: 10-period 50-period 200-period Close: 220.33 207.91 198.26 Volatility: 31 40 41 Volume: 3,183,608 3,949,914 3,707,166
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 12.8% above its 200-period moving average and is in an upward trend. Volatility is low 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 11 periods.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of the NYSE Stock Market.
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