Alibaba Group Holding Limited (NYSE:BABA) setting up for a period of out-performance on the price chart backed by solid fundamentals, market position and enviable growth
It’s been a solid 2019 for BABA stock with shares adding about 38% since the start of the year. Still, relative to Invesco China Technology ETF (NYSEARCA:CQQQ) and iShares China Large-Cap ETF (NYSEARCA:FXI) with gains of 31% and 42%, BABA stock’s performance is less impressive.
But there’s reason to believe the friendly trend in this Chinese stock is not only far from over, but is also setting up for a period of out-performance on the price chart backed by solid fundamentals, market position and enviable growth.
Shares of this Chinese stock just triggered a heavier and above-average volume breakout from a well constructed and supported handle pattern this past week. With the handle situated in the upper-third of the right side of BABA stock’s “W” or cup-shaped base, the next logical move in Alibaba shares is a test of its all-time-high of $211.70 immediately preceding last year’s correction.
The recommendation is to buy BABA stock today with shares of less than 0.50% above the breakout pattern resistance. Regarding money management, a stop-loss of 5% looks good as it allows investors to minimize exposure while technically giving the handle breakout enough, but not too much room before calling it a day.
Overall, the bias in prices is: Upwards.
The projected upper bound is: 191.80.
The projected lower bound is: 174.94.
The projected closing price is: 183.37.
A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
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 28 white candles and 22 black candles for a net of 6 white 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 45.1698. This is not an overbought or oversold reading. The last signal was a sell 1 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 52.60. 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 sell 28 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 36. This is not a topping or bottoming area. The last signal was a sell 0 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 6 period(s) ago.
Rex Takasugi – TD Profile
ALIBABA GRP ADR closed down -5.840 at 183.070. Volume was 35% below average (neutral) and Bollinger Bands were 41% narrower than normal.
Open High Low Close Volume___
188.000 188.000 182.560 183.070 2,098,245
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 184.33 178.51 165.60
Volatility: 31 30 43
Volume: 2,798,530 2,636,011 3,991,035
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 10.5% above 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 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 0 periods.
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