Alibaba Group Holding Limited (NYSE:BABA) Stock Could Cruise Past $300 In 2020

Alibaba Group Holding Limited (NYSE:BABA) Stock Could Cruise Past $300 In 2020

Alibaba Group Holding Limited (NYSE:BABA) Stock Could Cruise Past $300 In 2020

With Alibaba (NYSE:BABA) spreading its wings, the past year has been rewarding for shareholders. BABA stock has surged by 53% over the past year, backed by strong fundamental developments. I further believe that the stock is well positioned to touch $300 within the next 12 months. This implies an upside of 30% from current levels. This column will discuss the factors that will trigger sustained positive momentum for Alibaba stock.

Besides company-specific factors, easing of trade tension between the United States and China will likely support stock upside. Lower trade tension is likely to boost consumer confidence and consumption spending. It is worth noting that for January to November 2019, online retail sales in China increased by 16.6% on a year-on-year basis. Therefore, even with lower GDP growth and trade tension, online sales were robust. I expect higher year-on-year sales growth in 2020, which will benefit Alibaba.

Core Commerce Business Growth

For Alibaba, core commerce remains the key cash flow driver. In China, penetration into tier two and tier three cities is likely to ensure strong growth.

However, e-commerce growth is not limited to China. Alibaba has made significant inroads in Southeast Asia through Lazada. Currently, the company has 50 million annual active customers in the region. It is worth noting that e-commerce penetration in Southeast Asia was just 3% in 2018. Therefore, there is potential for robust growth over the next decade.

Another market that Alibaba has targeted is Europe. The company has already opened its first store in Madrid. Further, the e-commerce platform will compete with Amazon (NASDAQ:AMZN). It’s still the early days of company’s presence in Europe though, and it remains to be seen if Alibaba can gain market share.

It does seem that Alibaba is embarking on an ambitious global expansion program. The company does have financial resources for global expansion and this should help strong top-line growth sustain.

Technical Indicators

Overall, the bias in prices is: Upwards.

Note: this chart shows extraordinary price action to the upside.

The projected upper bound is: 232.96.

The projected lower bound is: 216.69.

The projected closing price is: 224.82.

Candlesticks

A black body occurred (because prices closed lower 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 30 white candles and 20 black candles for a net of 10 white candles.

Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.

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 47.4103. 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 65.48. 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 1 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 61. 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 3 period(s) ago.

Rex Takasugi – TD Profile

ALIBABA GRP ADR closed down -1.120 at 223.940. Volume was 27% below average (neutral) and Bollinger Bands were 3% wider than normal.

Open     High      Low     Close     Volume___
226.180 226.330 222.740 223.940 2,495,460
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 222.09 202.97 179.79
Volatility: 25 25 35
Volume: 2,717,104 3,930,109 3,507,250

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 24.6% above its 200-period moving average and is in an upward trend. Volatility is Our volume indicators reflect moderate flows of volume into BABA.N (mildly bullish). Our trend forecasting oscillators are currently bullish on BABA.N and have had this outlook for the last 54 periods. our momentum oscillator has set a new 14-period low while the security price has not. This is a bearish divergence.

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