Can Alibaba Group Holding Limited (NYSE:BABA) Stock Continue Its Powerful Breakout in 2020?

Can Alibaba Group Holding Limited (NYSE:BABA) Stock Continue Its Powerful Breakout in 2020?

Can Alibaba Group Holding Limited (NYSE:BABA) Stock Continue Its Powerful Breakout in 2020?

It has been a mixed run for Alibaba (NYSE:BABA) and it’s hard to put all the blame on the company. It’s my view that Alibaba stock doesn’t get enough love as it is, but the trade war between the U.S. and China really weighed on the stock.

Now granted, Alibaba is up almost 50% over the past year, joining names like Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Facebook (NASDAQ:FB) and Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG) in posting monster moves.

Keep in mind though, while these moves sound enormous — and given the market caps here, $4.5 trillion combined, it is — remember that the Nasdaq Composite fell ~20% from peak to trough in the fourth quarter, bottoming around this time last year. It’s not as if these stocks were riding high a year ago.

Case in point, while some of the stocks above have a better two-year track record, BABA stock is only up 22% over the past 24 months. That should help put things in perspective a bit.

That said, this stock is in the midst of a massive breakout. Can it continue in 2020?

On the earnings front, analysts expect 28.3% growth this year and 22.8% growth next year. In that sense, sub-30 times earnings actually seems cheap for a mega-cap tech stock growing sales at 30%-plus and earnings at 20%-plus over the next two years.

Of course, none of this matters if Alibaba can’t deliver. But with momentum in its business, strong cloud growth, a recent secondary offering and five consecutive quarterly earnings beats, bulls have faith BABA can keep it up.

I would love to see shares take a breather, giving it more runway for a continued rally in 2020. On a pullback, watch $200 to $205. Below and it may need more time to rest.

Technical Indicators

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 196.65.

The projected upper bound is: 224.25.

The projected lower bound is: 208.23.

The projected closing price is: 216.24.

Candlesticks

A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 28 white candles and 22 black candles for a net of 6 white candles.

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 81.0703. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 8 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 75.45. This is where it usually tops. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 18 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 111.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 13 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 21 period(s) ago.

Rex Takasugi – TD Profile

ALIBABA GRP ADR closed down -0.910 at 215.470. Volume was 15% below average (neutral) and Bollinger Bands were 25% wider than normal.

Open     High      Low     Close     Volume___
218.000 218.000 215.170 215.470 2,814,500
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 211.34 191.10 177.17
Volatility: 11 27 35
Volume: 3,934,683 4,018,035 3,498,979

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 21.6% above its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect very strong flows of volume into BABA.N (bullish). Our trend forecasting oscillators are currently bullish on BABA.N and have had this outlook for the last 41 periods. Our momentum oscillator is currently indicating that BABA.N is currently in an overbought condition.

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