Alibaba Group Holding Limited (NYSE:BABA) warned revenue from its core e-commerce business will fall in the current quarter
Alibaba BABA, -6.94% stock had a great run last year as it rose 55% , making it deserving of the title of being among the best technology stocks out of China. The stock even managed to continue the momentum into 2020 as it rose about 9.0% just 13 days into the new year. But the coronavirus outbreak disrupted normal business operations around the world and rattled investors making them go to safe-haven investments with the stock facing tremendous pressure.
Due to the nature of its business, Alibaba has been caught in this mess along with the fact that it is in the epicenter of it all. Consequently, the company warned revenue from its core e-commerce business will fall in the current quarter. Obviously, packages aren’t getting delivered on time and labor shortage is impacting the production of goods. But Alibaba isn’t standing by and watching the coronavirus derail its business. Iis focusing its efforts to boost its retail sales during these unprecedented times by providing $144 million in subsidies to encourage people to shop on its online platforms.
Although Alibaba has diversified operations, the company derives most of its revenue from the commerce business that contributed 88% to its total revenue in the latest quarter due to a strong year-on-year growth of 38 percent. Despite its stock falling since then, rest assured Alibaba will find new revenue sources by observing the situation and all the rising trends from it: yoga mats and other accessories for ‘staying at home’ are benefiting from increased sales on its platform.
Even its financial affiliate Ant Financial, Alibaba, has continued to build its business even though the coronavirus outbreak disrupted economic activities around the world as purchased a stake in Swedish fintech startup Klarna. It even tried to acquire MoneyGram MGI, -15.22%
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 207.30.
The projected upper bound is: 198.88.
The projected lower bound is: 170.21.
The projected closing price is: 184.54.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 30 white candles and 20 black candles for a net of 10 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 8 falling windows in the last 50 candles–this makes the current falling window even more bearish.
A long upper shadow occurred. This is typically a bearish signal (particularly when it occurs near a high price level, at resistance level, or when the security is overbought).
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 28.2137. This is not an overbought or oversold reading. The last signal was a sell 5 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 32.02. 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 39 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 -273.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 2 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 sell 14 period(s) ago.
Rex Takasugi – TD Profile
ALIBABA GRP ADR closed down -13.810 at 185.100. Volume was 85% above average (neutral) and Bollinger Bands were 45% wider than normal.
Open High Low Close Volume___
185.000 190.450 183.930 185.100 7,497,328
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 204.25 214.66 186.07
Volatility: 63 44 37
Volume: 5,686,823 3,768,185 3,562,588
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 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 0.5% below 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 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 32 periods.
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