Alibaba Group Holding Limited (NYSE:BABA) the ongoing U.S.-China trade war still imposes concerns

Alibaba Group Holding Limited (NYSE:BABA) the ongoing U.S.-China trade war still imposes concerns

Alibaba Group Holding Limited (NYSE:BABA) the ongoing U.S.-China trade war still imposes concerns

The superficial logic holds water. Although not facing a direct threat, the ongoing U.S.-China trade war still imposes concerns against Alibaba Group (NYSE:BABA) Naturally, this dynamic threatens Alibaba stock.

Moreover, Alibaba’s flagship property Tmall has capitalized on the rise of China’s consumerism. But if those consumers are losing jobs and eroding incomes, the economic tensions would hit BABA stock in the jugular.

But here’s a wrinkle to that thesis: thus far, little empirical evidence exists that Alibaba has suffered under the tariff shootout.

Nevertheless, nervous investors have shaved more than 20% off the BABA stock price since June of last year. That’s the case even with this month’s rebound effort. Fear, no matter how unmerited, remains a powerful force.

But this irrational apprehension won’t last indefinitely. Eventually, investors will realize that problems haven’t weighed down Alibaba stock; at least, not in the manner that experts suggested.

Indeed, China may be inching its way to the trade negotiation table. That development only bolsters the bullish case for Alibaba stock here in the aftermath of its post-earnings tumble.

Many Remain Bullish on BABA Stock Despite Noise

It wasn’t difficult to cast a shadow of doubt on the most-recent results from the so-called Amazon (NASDAQ:AMZN) of China. While last quarter’s top line was up 51% year-over-year, the 11% slide in operating income was worrisome. To many analysts, this confirmed that trade turbulence spelled out certain doom.

Alibaba stock tried to rally on the news, but the sellers were able to rekindle weakness.

However, not all experts (or amateurs, for that matter) are convinced the trade war is as bad as advertised.

SunTrust’s analysts remain among those supporters, citing dominance in China’s e-commerce market and the country’s burgeoning middle class. Additionally, the company has multiple strategic investments that reaffirm confidence in the long-term picture for the BABA stock price.

Baird analyst Colin Sebastian agrees. He further dives into the latter argument, noting viable synergies. One of those synergies is Alipay, an online payments company that now exceeds PayPal (NASDAQ:PYPL) in size. Further, Alipay has a cloud-computing platform called Aliyun which could drive incremental growth.

Most important, Sebastian maintains a “buy” rating on Alibaba stock.

Arguably the hardest-hitting bullish case for Alibaba stock right now, however, comes from Loop Capital analyst Rob Sanderson.

Sanderson initiated Loop’s coverage with a “buy” rating, explaining it was the firm’s “best play” on China’s shift toward a consumer-driven economy. More than that though, he noted Alibaba’s target market provides insulation from macro issues. These include slowing exports or trade wars. Better yet, they’re well positioned to serve China’s ravenous consumption.

But Alibaba’s slowing growth? It’s mostly due to the law of large numbers. Next year’s expected 35% improvement in revenue and subsequent 24% increase in per-share earnings is still amazingly impressive, and prices BABA stock at only 24.6-times forward-looking earnings.

Overall, the bias in prices is: Downwards.

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

By the way, prices are vulnerable to a correction towards 165.65.

The projected upper bound is: 169.93.

The projected lower bound is: 149.32.

The projected closing price is: 159.62.

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 26 white candles and 24 black candles for a net of 2 white candles.

A doji star occurred (where a doji gaps above or below the previous candle). This often signals a reversal with confirmation occurring on the next bar.

A falling window occurred (where the bottom of the previous shadow is above the top of the current shadow). This usually implies a continuation of a bearish trend. There have been 6 falling windows in the last 50 candles–this makes the current falling window even more 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 75.4995. This is not an overbought or oversold reading. The last signal was a sell 0 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 46.15. 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 6 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 113.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 7 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 4 period(s) ago.

Rex Takasugi – TD Profile

ALIBABA GRP ADR closed down -2.610 at 160.040. Volume was 6% below average (neutral) and Bollinger Bands were 37% wider than normal.

Open High Low Close Volume___
160.100 161.689 158.830 160.040 3,089,344

Technical Outlook
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 154.43 174.07 163.07
Volatility: 34 38 44
Volume: 4,031,909 3,869,876 3,987,944

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 down today (bearish) 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 1.9% below its 200-period moving average and is in an downward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect moderate flows of volume out of BABA.N (mildly bearish). Our trend forecasting oscillators are currently bearish on BABA.N and have had this outlook for the last 23 periods.

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