Alibaba Group Holding Limited (NYSE:BABA) Looking beyond China for growth

Alibaba Group Holding Limited (NYSE:BABA) Looking beyond China for growth

Alibaba Group Holding Limited (NYSE:BABA) Looking beyond China for growth

Alibaba’s core commerce revenue rose 51% annually last year and accounted for 86% of its top line. That’s a robust growth rate, but its core Chinese market, where over 95% of its sellers are located, is struggling with an economic slowdown exacerbated by an ongoing trade war.

Alibaba is expanding its ecosystem overseas to offset that slowdown. It expanded Alibaba.com into countries like Brazil, Canada, and India, and it serves a growing list of countries with its AliExpress platform for overseas buyers. It also owns a majority stake in Lazada , the biggest e-commerce player in Southeast Asia.

A third of Alibaba.com’s B2B buyers are based in the U.S., many of whom are merchants who resell Alibaba’s products to American buyers on platforms like Amazon. Many products are significantly cheaper on Alibaba’s platforms when ordered in bulk, and merchants can usually still profit from a sale after paying delivery and custom fees.

Alibaba hopes that inviting U.S. merchants to set up B2B shops will help double the platform’s number of international brands to 40,000 within the next three years. Opening its doors to overseas merchants could also help Alibaba keep pace with its top rival JD (NASDAQ: JD) , which lets Chinese buyers make overseas purchases with JD Global; and Amazon, which recently shuttered its Chinese marketplace but continues to sell products from U.S. merchants to Chinese buyers.

Alibaba’s strategy makes sense, but it probably won’t win over many smaller businesses in America. The fees are high, the trade war is still raging, and Alibaba’s affiliation with counterfeit goods hurts its credibility — even though those accusations target Taobao instead of Tmall and Alibaba.com. Therefore, it’s a predictable way to counter JD and Amazon, but it probably won’t significantly boost the company’s core commerce sales anytime soon.

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 168.75.

The projected upper bound is: 187.90.

The projected lower bound is: 169.78.

The projected closing price is: 178.84.

Candlesticks

A white body occurred (because prices closed higher than they opened).
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 22 white candles and 28 black candles for a net of 6 black candles.

Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.

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 84.5679. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 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 65.48. 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 35 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 138.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 13 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 5 period(s) ago.

Rex Takasugi – TD Profile

ALIBABA GRP ADR closed up 0.580 at 178.670. Volume was 3% below average (neutral) and Bollinger Bands were 35% narrower than normal.

Open     High      Low     Close     Volume___
178.000 178.930 176.950 178.670 3,536,573
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 173.47 165.38 163.71
Volatility: 21 35 43
Volume: 3,313,272 4,289,709 3,894,699

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 9.1% 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 24 periods.

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