Traders appear to be taking profits in Alibaba Group Holding Limited (NYSE:BABA) ahead of earnings
While the options market saw higher call activity ahead of the e-commerce company’s earnings report Wednesday morning, generally a bullish signal, most of those calls were actually being sold — a sign that traders might be getting cold feet ahead of the results, says Dan Nathan, principal at RiskReversal.com.
The most active strikes being sold were the May $180 and June $190 calls, he said, which meant people weren’t convinced that the next few months would bring more gains for the $174 stock.
“Listen, this stock has traded pretty well this year. It’s up 24% on the year. It’s up 30% from its 52-week lows in December. When you look at that, though, it’s right there on some pretty key support,” Nathan said, pointing to Alibaba’s five-year chart.
Alibaba shares climbed Tuesday, gaining more than 2% in the first half of the trading session. The stock is up more than 26% year to date.
Overall, the bias in prices is: Sideways.
Note: this chart shows extraordinary price action to the downside.
The projected upper bound is: 183.99.
The projected lower bound is: 165.19.
The projected closing price is: 174.59.
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 29 white candles and 21 black candles for a net of 8 white candles.
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 25.4477. This is not an overbought or oversold reading. The last signal was a buy 2 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 39.97. 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 48 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 -117.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 6 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 5 period(s) ago.
Rex Takasugi – TD Profile
ALIBABA GRP ADR closed up 4.830 at 174.840. Volume was 24% above average (neutral) and Bollinger Bands were 9% wider than normal.
Open High Low Close Volume___
172.550 175.150 171.480 174.840 3,763,594
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 182.61 182.76 165.09
Volatility: 48 33 43
Volume: 3,927,346 2,863,070 4,015,536
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 is currently 5.9% 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 3 periods.
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