Alibaba Group Holding Limited (NYSE:BABA) stock is a bargain, but it’s facing considerable uncertainty

Alibaba Group Holding Limited (NYSE:BABA) stock is a bargain, but it’s facing considerable uncertainty

Alibaba Group Holding Limited (NYSE:BABA) stock is a bargain, but it’s facing considerable uncertainty

Alibaba (NYSE:BABA) continues to maintain double-digit-percentage growth, which is certainly positive for Alibaba stock. Despite trade-related concerns, Alibaba is advancing in several different sectors as its founder, Jack Ma, who is now the company’s executive chairman, prepares to retire in September.

Alibaba stock currently has both positive and negative catalysts. Although valuation could make buying at least a small position in BABA stock worthwhile, investors should keep their expectations of BABA in check.

Alibaba Is a Cheap Source of Growth

Like peers such as Amazon (NASDAQ:AMZN) and JD.com (NASDAQ:JD), Alibaba has moved headlong into the digital-ad business. It also competes with Baidu (NASDAQ:BIDU) on smart speakers, though it may need to play catch-up in the latter area, as it has fallen behind BIDU in smart speakers. BABA also has a cloud business and has developed a chip for self-driving cars.

Additionally, Alibaba has focused on expanding outside of China. Recent reports revealed that the company plans to invest $100 million in a joint venture in Russia. Moreover, with the $10 billion IPO of BABA slated to occur in Hong Kong, the company will have enough cash to fund its ventures generously.

Despite my criticism of BABA stock in the past, I currently see a lot to like about Alibaba stock. Wall Street analysts, on average, expect the company’s profit to rise 21.9% during the current fiscal year and 29.3% next fiscal year. Given that level of growth and Alibaba stock’s forward price–earnings (PE) ratio of just 19.4, I believe buying BABA stock is worthwhile.

Overall, the bias in prices is: Upwards.

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

The projected upper bound is: 185.15.

The projected lower bound is: 164.47.

The projected closing price is: 174.81.

Candlesticks

A black body occurred (because prices closed lower 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 23 white candles and 27 black candles for a net of 4 black 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 4 rising windows in the last 50 candles–this makes the current rising window even more bullish.

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 76.9038. This is not an overbought or oversold reading. The last signal was a sell 13 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 64.24. 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 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 168.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. 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 17 period(s) ago.

Rex Takasugi – TD Profile

ALIBABA GRP ADR closed up 5.600 at 175.050. Volume was 34% above average (neutral) and Bollinger Bands were 16% wider than normal.

Open High Low Close Volume___
175.970 177.920 174.380 175.050 4,895,212

Technical Outlook
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish

Moving Averages: 10-period     50-period     200-period
Close: 168.51 169.27 162.92
Volatility: 30 39 43
Volume: 4,799,768 4,337,039 3,945,564

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 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 7.4% above its 200-period moving average and is in an upward trend. Volatility is relatively normal 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 8 periods.

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