Alibaba Group Holding Limited (NYSE:BABA) if you’re speculating on additional upside, bull call spreads are appealing
Chinese stocks were bid up alongside their American brethren on Monday. Tech titan, Alibaba, led the charge with a 3.3% gain on heavy volume.
The rally marked a clear victory for BABA stock on the charting front by thrusting its share price back above the 50-day moving average. Roughly 50% of its spring correction has been recovered (reverse corrected?). Now that it sits on the northside of all major moving averages, BABA is well-positioned for a run back to its 2019 high of $195.72.
On the options trading front, traders came after calls with a vengeance. Activity grew to 185% of the average daily volume, with 346,486 total contracts traded. Calls accounted for 64% of the session’s sum.
With the uncertainty of the G-20 summit in the rearview mirror, implied volatility sunk like a stone, falling to 30% or the 14th percentile of its one-year range. Premiums are officially cheap and pricing in daily moves of $3.27 or 1.9%. If you’re speculating on additional upside, bull call spreads are appealing.
Overall, the bias in prices is: Upwards.
Note: this chart shows extraordinary price action to the upside.
The projected upper bound is: 185.58.
The projected lower bound is: 164.93.
The projected closing price is: 175.25.
A white body occurred (because prices closed higher 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 23 white candles and 27 black candles for a net of 4 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 74.2801. This is not an overbought or oversold reading. The last signal was a sell 14 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 64.67. 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 20 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 135.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 2 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 18 period(s) ago.
Rex Takasugi – TD Profile
ALIBABA GRP ADR closed up 0.400 at 175.450. Volume was 25% below average (neutral) and Bollinger Bands were 19% wider than normal.
Open High Low Close Volume___
175.000 175.550 174.250 175.450 2,714,577
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 169.50 169.07 162.97
Volatility: 26 39 43
Volume: 4,331,269 4,338,246 3,936,185
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 7.7% above 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 volume flowing into and out of BABA.N at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on BABA.N and have had this outlook for the last 9 periods.