Alibaba Group Holding Limited (NYSE:BABA) massive tax cut by the government presents a buying opportunity

Alibaba Group Holding Limited (NYSE:BABA) massive tax cut by the government presents a buying opportunity

Alibaba Group Holding Limited (NYSE:BABA) massive tax cut by the government presents a buying opportunity

On the first trading day of the year, Apple (AAPL) announced a significant downward revision to its guidance. The reasons were slowing emerging market growth — China — and the trade war. There is another behemoth in China that may feel some of the same effects of both of these factors; Alibaba (BABA). The slowing economic activity in China is significant enough that the government instituted a 1% tax cut – relative to GDP – in order to stimulate the economy. While Alibaba has been a juggernaut of growth, they are not immune to the basic forces of economics. I believe there may be a significant decline in their earnings due February 7th.

Overall, the bias in prices is: Upwards.

The projected upper bound is: 163.13.

The projected lower bound is: 140.22.

The projected closing price is: 151.68.

Candlesticks

A black body occurred (because prices closed lower 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 26 white candles and 24 black candles for a net of 2 white candles.

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 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 91.0860. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 8 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 58.60. 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 11 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 132.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 5 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 down -0.370 at 151.320. Volume was 44% below average (neutral) and Bollinger Bands were 8% wider than normal.

Open High Low Close Volume___
151.900 153.360 150.150 151.320 2,612,837

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

Moving Averages: 10-period 50-period 200-period
Close: 142.80 147.25 170.88
Volatility: 56 50 43
Volume: 3,429,523 4,524,984 4,255,385

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 11.4% below its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect moderate flows of volume out of BABA.N (mildly bearish). Our trend forecasting oscillators are currently bearish on BABA.N and have had this outlook for the last 17 periods.

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