Alibaba Group Holding Limited (NYSE:BABA) will pay US$693.3 million for a 49 per cent stake in a new unit that will control 29.9 per cent of STO

Alibaba Group Holding Limited (NYSE:BABA) will pay US$693.3 million for a 49 per cent stake in a new unit that will control 29.9 per cent of STO

Alibaba Group Holding Limited (NYSE:BABA) will pay US$693.3 million for a 49 per cent stake in a new unit that will control 29.9 per cent of STO

Alibaba Group Holding plans to buy a stake in Chinese courier service firm STO Express, as the e-commerce juggernaut expands its networks.

Alibaba will pay 4.66 billion yuan (US$693.3 million) for a 49 per cent stake in a new unit that will control 29.9 per cent of Shenzhen-listed STO, the courier service firm said in an exchange statement, without saying how much Alibaba will directly control the listed company. The stock jumped by the 10 per cent daily limit to 22.48 yuan after the open on Monday.

“STO will further explore co-operations in areas of logistic technology, parcel delivery end and new retail logistics after the deal is closed,” the courier firm said in the statement.

Alibaba signed a framework agreement over the weekend with Deyin Investment, STO’s biggest shareholder, which will devolve a combined 46 per cent stake in the company to two new units that will be soon created, according to the statement. Currently, Deyin controls about 54 per cent of the listed company.

STO, which is based in Shanghai, is the smallest among China’s five major courier service firms in terms of market cap. It is capitalised at 31.3 billion yuan, compared with 153.1 billion yuan for SF Holding and 106.5 billion yuan for US-listed ZTO Express Cayman. Its shares had gained 24 per cent this year through Friday, almost matching the performance of the benchmark Shanghai Composite Index.

Overall, the bias in prices is: Upwards.

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

By the way, prices are vulnerable to a correction towards 167.70.

The projected upper bound is: 186.05.

The projected lower bound is: 165.73.

The projected closing price is: 175.89.

Candlesticks

A white body occurred (because prices closed higher 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 29 white candles and 21 black candles for a net of 8 white candles.

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 5 falling windows in the last 50 candles–this makes the current falling window even more bearish. The two candles preceding the falling window were black, which makes this pattern 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 19.0211. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 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 52.03. 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 2 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 -68. This is not a topping or bottoming area. The last signal was a sell 3 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 sell 1 period(s) ago.

Rex Takasugi – TD Profile

ALIBABA GRP ADR closed down -2.290 at 175.030. Volume was 22% below average (neutral) and Bollinger Bands were 12% wider than normal.

Open High Low Close Volume___
171.880 175.350 171.800 175.030 3,098,813

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

Moving Averages: 10-period 50-period 200-period
Close: 182.71 162.24 168.24
Volatility: 36 42 43
Volume: 3,186,891 3,197,101 4,191,798

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 4.0% 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 37 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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