05/26/23
Is Alibaba’s brutal run nearly over?
Profit margins are still down as a result of COVID, but the company is back to raking in cash, with revenue way up.
There are still some issues with China-US relations to worry about, but if you are interested in weathering that storm, this stock could be a great bet.
I plan on taking a position next week – in the meantime, let’s take a look at the big picture on Alibaba Group Holdings, Ltd. (BABA):
Why? If I’m buying shares of the company, I don’t plan on trading them.
That’s just me.
This is a company that makes plenty of money, but it’s the outside influences that have hurt the share price.
The stock has had a hell of a time since October of 2020.
As you can see, it’s done nothing but fall and is steadily hovering below its opening price on the day it went public.
But what I’m seeing is a deceleration…
The two green arrows point to major buy periods where investors — both institutional and retail — snatched up the stock.
The second arrow, however, acted as a bit of a spring where the share price was propelled higher for a few months…
This tells me that the market may very well have initiated a buy zone for the stock.
On the lower chart, the Volume Accumulation indicator shows the overall trend in terms of buying and selling…
Notice that the selling has receded significantly.
Below this is the TTM Squeeze and a sort of “composite” Stochastic.
The two place the momentum to the downside and the stock is nearing “oversold”, which isn’t a surprise given the market’s environment… and BABA’s.
That said, there’s some empty space on the chart which would align with the end of this wave down.
For a low risk entry, I like it in the high $60’s to low $70’s.
How’s this a low risk entry?
Simple. If it falls under the October 2022 low, sell.
If not, you’re a genius and can tell everyone at the office.
This material is not an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed, and is to be used for informational purposes only. Any performance results discussed herein represent past performance, not a guarantee of future performance, and are not indicative of any specific investment. Due to the timing of information presented, investment performance may be adjusted after the publication of this report. There can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this communication will be profitable, equal any corresponding indicated historical performance levels or be suitable for your portfolio.
