Alibaba Group Holding Limited (NYSE:BABA) stock bounced back in the last month and it’s just getting started
Much of the direction that Alibaba (NYSE: BABA) stock takes depends on the trade talk progress between the U.S. and China. So when the two countries agreed on a temporary truce that would prevent further new tariffs, Alibaba stock bounced.
The stock bottomed at $150 at the start of June but just recently broke above some 50-day and 200-day technical resistance at around $165.
Though the earnings report is still nearly a month away (set for Aug. 14 before the market opens), what are the near-term positive catalysts?
Strong Growth Expected
In the fiscal fourth quarter, Alibaba reported earnings of $1.25 a share as revenue grew 39.6% to $13.6 billion. The company grew strongly after taking a number of initiatives. It attacked counterfeiting by forming the Alibaba Anti-Counterfeiting Alliance in 2017.
The group now has 132 global brand companies stemming from 16 countries in 12 diverse industries. Despite criticisms of Intellectual Property (IP) theft and copying in China, China took steps to protect against IP infringement in recent years. Alibaba aligned its corporate values to that of China’s by protecting IP.
Overall, the bias in prices is: Upwards.
Note: this chart shows extraordinary price action to the upside.
The projected upper bound is: 184.47.
The projected lower bound is: 164.63.
The projected closing price is: 174.55.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 21 white candles and 29 black candles for a net of 8 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 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 90.2856. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 3 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 61.04. 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 30 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 71. This is not a topping or bottoming area. The last signal was a sell 8 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 0 period(s) ago.
Rex Takasugi – TD Profile
ALIBABA GRP ADR closed up 0.630 at 174.820. Volume was 30% below average (neutral) and Bollinger Bands were 40% narrower than normal.
Open High Low Close Volume___
172.490 176.210 172.490 174.820 2,535,227
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 171.03 165.61 163.36
Volatility: 27 38 43
Volume: 2,889,515 4,352,834 3,890,600
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 7.0% above its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. 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 19 periods.
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