Alibaba Group Holding Limited (NYSE:BABA) set to report second-quarter fiscal 2020 results on Nov 1

Alibaba Group Holding Limited (NYSE:BABA) set to report second-quarter fiscal 2020 results on Nov 1

Alibaba Group Holding Limited (NYSE:BABA) set to report second-quarter fiscal 2020 results on Nov 1

Alibaba Group Holding Limited BABA is set to report second-quarter fiscal 2020 results on Nov 1. In the last reported quarter, the Chinese e-commerce giant delivered a positive earnings surprise of 22%.

The surprise history has been decent in Alibaba’s case. The company surpassed estimates in three of the trailing four quarters, with average positive surprise of 19.37%.

Strength in Core Commerce Business

Given innovation in data technology, widespread application of big data and increasing validation for Taobao and Tmall portals, its top line is expected to have expanded in the quarter to be reported.

During the fiscal second quarter, the company bought an import e-commerce business, Kaola, from NetEase for about $2 billion. The deal is likely to have enhanced Alibaba’s cross border e-commerce activities and led to top-line growth in the quarter to be reported.

The company expanded product options on Alibaba’s Tmall platform. This is likely to have resulted in top-line growth in the to-be-reported quarter.

Strong Mobile Growth

The company’s Mobile Monthly Active Users improved sequentially in the fiscal first quarter, a trend that most likely continued in the fiscal second quarter. This is because of increased adoption of mobile devices by consumers as the primary method of accessing Alibaba’s platforms. 

The company has been building its online marketing inventory on both mobile and PC, as well as recording higher monetization rates. These factors are likely to have continued in the fiscal second quarter and boosted Alibaba’s profits.

Growing Cloud Momentum

In the to-be-reported quarter, revenues from the cloud segment are expected to have increased from a year ago, backed by growth in the number of paying customers and higher-than-usual spending by them, reflecting increased usage of services.

Overhangs Remain

It has been spending heavily in new areas of core online retail business, including supermarkets, stores, new artificial intelligence, digital entertainment and cloud computing businesses. The increased expenses might reflect on Alibaba’s fiscal second-quarter results.

Also, U.S.-China trade tensions and other political worries might have weighed on Alibaba’s domestic as well as international growth.

Moreover, increasing competition from companies like Amazon and Jd.com, among others, as well as deceleration of growth in the e-commerce market — both domestically and internationally — might have impacted its earnings in the soon-to-be-reported quarter.

Technical Indicators

Overall, the bias in prices is: Upwards.

The projected upper bound is: 188.06.

The projected lower bound is: 167.01.

The projected closing price is: 177.54.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 21 white candles and 28 black candles for a net of 7 black candles.

An engulfing bullish line occurred (where a white candle’s real body completely contains the previous black candle’s real body). The engulfing bullish pattern is bullish during a downtrend. It then signifies that the momentum may be shifting from the bears to the bulls.

If the engulfing bullish pattern occurs during an uptrend (which appears to be the case with ALIBABA GRP ADR), it may be a last engulfing top which indicates a top. The test to see if this is the case is if the next candle closes below the top of the current (white) candle’s real body.

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 82.0370. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 5 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 56.29. 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 60 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 74. This is not a topping or bottoming area. The last signal was a sell 1 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 12 period(s) ago.

Rex Takasugi – TD Profile

ALIBABA GRP ADR closed up 0.640 at 177.530. Volume was 13% below average (neutral) and Bollinger Bands were 19% narrower than normal.

Open     High      Low     Close     Volume___
175.260 177.880 173.940 177.530 2,511,744
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 173.93 172.96 172.23
Volatility: 39 39 37
Volume: 2,196,765 2,414,944 3,217,006

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 3.1% above its 200-period moving average and is in an upward 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 bullish on BABA.N and have had this outlook for the last 1 periods.

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