Alibaba Group Holding Limited (NYSE:BABA) set to report its Q3 fiscal 2020 financial results before the market opens on Thursday, February 13
Alibaba (BABA) shares have surged 36% in the last six months to easily top the S&P 500’s 17% climb. The Chinese e-commerce giant looks ready to continue its expansion in the post-Jack Ma era as it grows its cloud computing reach and its retail leg expands to smaller cities as part of China’s middle-class explosion.
With Alibaba set to report its Q3 fiscal 2020 financial results before the market opens on Thursday, February 13, let’s see why BABA stock looks like it might be worth buying.
Alibaba reportedly controls roughly two-thirds of China’s e-commerce market, through Taobao and Tmall. This alone might be worth the price of admission since China is the world’s second-largest economy.
Plus, more and more of China’s 1.4 billion people enter the vital middle-class demographic every day. And McKinsey estimates China’s middle class could hit 550 million by 2022, which is far larger than the entire U.S. population of roughly 330 million.
Last quarter, BABA’s mobile monthly active users hit 785 million, up 30 million from the prior-year quarter. Alibaba is also dedicated to expanding its logistics business to help it grow outside of major markets like Beijing and Shanghai, which have become more saturated. With this in mind, BABA’s core commerce business, which jumped 40% last quarter, accounted for 85% of total sales.
In an effort to diversify, Alibaba has jumped into cloud computing in recent years. The segment surged 64% last period to account for 8% of second quarter revenue. Alibaba plans to expand its cloud business, as Amazon (AMZN), Microsoft (MSFT), and others prove why cloud is worth the investment.
Meanwhile, the firm’s digital media and entertainment business, which consists primarily of Youku and UCWeb, jumped 23% last quarter. Alibaba executives pointed to the synergies between commerce and entertainment and noted that Youku’s average daily subscribers increased 47%.
The company is also investing in its portfolio with “original content that resonates with Chinese audiences.” And investors should note that China is one of the only places that Netflix (NFLX) doesn’t operate.
Overall, the bias in prices is: Upwards.
Note: this chart shows extraordinary price action to the upside.
The projected upper bound is: 235.76.
The projected lower bound is: 213.83.
The projected closing price is: 224.80.
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 29 white candles and 21 black candles for a net of 8 white candles.
A rising window occurred (where the top of the previous shadow is below the bottom of the current shadow). This usually implies a continuation of a bullish trend. There have been 6 rising windows in the last 50 candles–this makes the current rising window even more bullish.
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 48.7929. This is not an overbought or oversold reading. 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 58.95. 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 sell 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 115.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 7 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 4 period(s) ago.
Rex Takasugi – TD Profile
ALIBABA GRP ADR closed up 7.100 at 224.310. Volume was 9% above average (neutral) and Bollinger Bands were 10% wider than normal.
Open High Low Close Volume___
220.950 225.520 220.220 224.310 3,856,768
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 216.61 213.46 182.57
Volatility: 41 33 37
Volume: 3,674,343 3,392,991 3,578,618
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 gapped up today (bullish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
ALIBABA GRP ADR is currently 22.9% above its 200-period moving average and is in an downward trend. Volatility is high 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 12 periods.
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