Alibaba Group Holding Limited (NYSE:BABA) expanding its operations at a rapid pace

Alibaba Group Holding Limited (NYSE:BABA) expanding its operations at a rapid pace

Alibaba Group Holding Limited (NYSE:BABA) expanding its operations at a rapid pace

Alibaba is taking on Amazon by expanding its cloud operations in Europe.

The European market provides Alibaba with a major opportunity to grow beyond its home base in China.

Alibaba is also looking to make its presence felt by entering into partnership with retailers who need cloud services.

Alibaba’s cloud revenue could rise to 15% of the total revenue base by 2021, up from 7% currently.

A higher margin from this segment should give a major bullish momentum to the stock in the next few quarters.

Alibaba (BABA) is trying to break Amazon’s cloud dominance in Europe by expanding its operations at a rapid pace. European companies are more keen to favor a multi-cloud option while choosing their cloud providers. This should provide Alibaba with a good opportunity to gain a foothold in the lucrative European market. Alibaba’s CEO, Daniel Zhang, has already mentioned that cloud will be the “main business” of the company in the future. Alibaba has the scale and the deep pocket to provide an alternative to AWS in Europe.

Alibaba is also looking to expand its cloud services by forming partnerships with local companies. It recently announced a partnership with Spain’s El Cortes Ingles to provide cloud solutions, digital payments, logistics, e-commerce, and New Retail services. El Cortes Ingles is the biggest department store in Europe with a revenue base similar to Macy’s (M).

Growth in international markets provides Alibaba Cloud a longer growth runway and an opportunity to improve the margins. With the current growth trend, the cloud segment should make close to 12-15% of the total revenue base by FY 2021. Better margins and growth rate should improve the stand-alone valuation of cloud segment and provide a bullish momentum to the stock.

Overall, the bias in prices is: Downwards

By the way, prices are vulnerable to a correction towards 156.78.

The projected upper bound is: 153.43.

The projected lower bound is: 127.65.

The projected closing price is: 140.54.

Candlesticks

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 23 white candles and 27 black candles for a net of 4 black candles.

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 14.0775. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 4 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 36.54. 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 45 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 -171.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 9 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 sell 6 period(s) ago.

Rex Takasugi – TD Profile

ALIBABA GRP ADR closed down -3.160 at 140.820. Volume was 20% below average (neutral) and Bollinger Bands were 5% narrower than normal.

Open High Low Close Volume___
144.330 144.740 140.130 140.820 3,964,490

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

Moving Averages: 10-period 50-period 200-period
Close: 150.73 148.60 174.95
Volatility: 23 56 43
Volume: 4,068,578 5,011,223 4,281,648

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 19.5% below its 200-period moving average and is in an downward trend. Volatility is low as compared to the average volatility over the last 10 periods. 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 1 periods.

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