Alibaba Group Holding Limited (NYSE:BABA) earnings won’t convince most risk-averse investors to buy BABA stock

Alibaba Group Holding Limited (NYSE:BABA) earnings won’t convince most risk-averse investors to buy BABA stock

Alibaba Group Holding Limited (NYSE:BABA) earnings won’t convince most risk-averse investors to buy BABA stock

The perception of Alibaba (NYSE:BABA) can diverge dramatically among educated investors. Some believe that BABA stock is a cornerstone of any portfolio, while others say that Alibaba stock is a sign of a market run amok.

The bulls’ view on BABA stock is rather simple: Alibaba is the unquestioned e-commerce leader in China.T hat’s a market with a population nearing 1.4 billion people. Millions of those citizens are moving into the middle class – and into Alibaba’s sweet spot – every month.

The bears’ view is just as simple, however. China remains a Communist country. Given that fact alone, investors could logically decide not to own any Chinese stocks, let alone one valued at nearly US$400 billion. BABA stock carries many risks, one of which is the fact that BABA shareholders don’t actually own shares of the company.

The argument between the supporters and detractors of BABA stock isn’t going to end any time soon – and certainly not ahead of Alibaba’s fourth-quarter earnings, which are due to be reported next week. Personally, I’ve long leaned towards the skeptical side when it comes to BABA stock. Investors can logically disagree – again, this is a stock whose beauty is somewhat in the eye of the beholder – but those who do should at least understand the risks posed by BABA stock.

Overall, the bias in prices is: Upwards.

The projected upper bound is: 166.44.

The projected lower bound is: 145.56.

The projected closing price is: 156.00.

Candlesticks

A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 26 white candles and 24 black candles for a net of 2 white candles.

An engulfing bullish line occurred (where a white candle’s real body completely contains the previous black candle’s real body). The engulfing bullish pattern is bullish during a downtrend. It then signifies that the momentum may be shifting from the bears to the bulls.

If the engulfing bullish pattern occurs during an uptrend (which appears to be the case with ALIBABA GRP ADR), it may be a last engulfing top which indicates a top. The test to see if this is the case is if the next candle closes below the top of the current (white) candle’s real body.

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 34.3794. 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 60.20. 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 19 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 67. This is not a topping or bottoming area. The last signal was a sell 2 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 13 period(s) ago.

Rex Takasugi – TD Profile

ALIBABA GRP ADR closed up 3.830 at 155.860. Volume was 39% below average (neutral) and Bollinger Bands were 20% wider than normal.

Open High Low Close Volume___
151.890 156.000 151.210 155.860 2,729,468

Technical Outlook
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 153.10 148.39 170.03
Volatility: 31 46 43
Volume: 3,520,372 4,289,001 4,262,778

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 8.3% below its 200-period moving average and is in an upward trend. Volatility is relatively normal 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 7 periods.

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