Despite Challenges, Alibaba Group Holding Limited (NYSE:BABA) Is a Safer Bet on China

Despite Challenges, Alibaba Group Holding Limited (NYSE:BABA)  Is a Safer Bet on China

Despite Challenges, Alibaba Group Holding Limited (NYSE:BABA) Is a Safer Bet on China

The Chinese e-commerce giant, Alibaba (NYSE:BABA) has a lot at stake when it reports 4Q earnings on Wednesday. Its shares have rallied about 30% since the January lows, on optimism that the Chinese consumer economy remains strong enough to support expansion in the company’s sales.

But that upbeat scenario is increasingly coming under threat amid China’s escalating trade war with the U.S. and growing competition within China from other e-commerce operators. U.S. President Donald Trump on Friday raised tariffs on $200-billion Chinese goods to 25% from 10% and threatened to add more products as trade talks between the two global powers stalled. The stock responded sharply to the news last week, dropping 8.8% over the last five sessions to close Friday at $178.

If the two largest economies in the world fail to resolve their dispute and enter a full-blown trade war, Alibaba’s sales projections for its next fiscal year may weaken, clouding the outlook for its stock. The slowdown in China is most likely to hit sales of consumer durable goods and Alibaba has already seen slower growth in consumer electronics, especially cell-phones, its Vice Chairman Joe Tsai told analysts in January.

Alibaba is also facing strong competition from Chinese online retailers including Jd.Com (NASDAQ:JD) and Pinduoduo (NASDAQ:PDD). Alibaba, with a market capitalization of $461 billion, had reported a 27% revenue jump from its core retail-marketplace business in the quarter through December, compared with the same period in the previous year. That was the slowest expansion in three years as the unit, comprising the Taobao and Tmall e-commerce platforms, came under pressure.

Overall, the bias in prices is: Sideways.

The projected upper bound is: 186.58.

The projected lower bound is: 169.22.

The projected closing price is: 177.90.

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 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 21.3465. This is not an overbought or oversold reading. The last signal was a buy 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 40.20. 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 46 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 -153.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 4 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 3 period(s) ago.

Rex Takasugi – TD Profile

ALIBABA GRP ADR closed down -1.040 at 178.000. Volume was 28% above average (neutral) and Bollinger Bands were 24% narrower than normal.

Open High Low Close Volume___
180.100 180.790 174.110 178.000 3,858,833

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

Moving Averages: 10-period 50-period 200-period
Close: 185.37 183.29 165.33
Volatility: 37 30 43
Volume: 3,489,864 2,799,737 4,005,176

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 7.7% above 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 volume flowing into and out of BABA.N at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on BABA.N and have had this outlook for the last 1 periods.

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