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Alibaba Group Holding Limited (BABA)

Alibaba stock forecast: buy or sell

Close on Oct 23rd, 2020
$309.92 +1.19%
3 months performance
23.40%
Published: October 23rd, 2020 - 4.22pm EDT

Alibaba stock outlook

  • Alibaba inched a 1.19% after reaching all-time highs on Wednesday
  • Barclays posted a bullish rating for Alibaba on Tuesday, targeting $360.00
  • Alibaba Group Holding Limited, through its subsidiaries, provides online and mobile commerce businesses in the People's Republic of China and internationally.

Please read:
The viewpoints expressed in this post are personal and not recommendations for you to buy or sell stocks. The author of this text does not have an understanding of the particular conditions of the reader, his or her financial statements or his or her own best interests at any given time. All users should speak with their financial advisor before buying or selling any securities Comments are expressed for educative purposes only

Alibaba stock charts

Should I buy Alibaba stock?

Even if you are a experienced or a novel trader, best trading results come from using an investing strategy that never leaves to random or subjective opinions when is the best moment to buy or sell stocks. Trading strategies are meant for helping you in the decision process of what stocks to pick and when is the best moment to buy them. At Stocks2.com, we like to use very simple but trusted and powerful trend following trading strategies. Simple things usually work the best

Is $BABA stock a buy?

Currently, Alibaba stock matches one trading strategy:

Uptrend buy setup

Alibaba stock continues to trend higher since last March and has marked an amazing 82.36% gain. Price marked a local bottom in this uptrend at $264.56 in late September, and since then it bounced up a 17.15%. Price just broke out above the entry point at $299.00, but it's still eligible. If price climbs beyond $313.95, don't chase the price and wait for another opportunity. If you decide to enter this trade, the suggested stop loss is at $269.10

Buy setupBuy pointStop lossRisk
Uptrend buy setup$299.00$269.1010%

Should I sell Alibaba stock?

Knowing when to sell a stock is even more difficult than knowing when to buy it. Trading strategies help us to avoid rash decisions based on our personal moods or the buzz surrounding the market. Our trading system selects very simple strategies to guide us on when is a good time to sell a stock. Be aware that these strategies are not intended for selling short Alibaba stock

A guiding principle is that you should not mantain a trading operation that leads to higher than expected losses by the time of the buy. The timing to sell your stock should always be determined by the stop-loss (automatic or manual)

Is it time to sell Alibaba stock?

Currently, Alibaba stock doesn't match any of our preferred sell setups, so if you own Alibaba shares and your operation is in profit probably is not time to sell now

Analysts' recommendations to buy or sell Alibaba stock

Brokerage firms and financial institutions post stock ratings based on their views of the market and the fundamental and technical situation of the analyzed stock. Unfortunately, the accuracy of these predictions is not very high, and certainly not a direct buy or sell signal

In the last 30 days, 12 analyst ratings were published for Alibaba. General sentiment is bullish, with 9 out of 12 publishing positive outlooks

Alibaba ratings

Brokerage firmRating
Sep 28th, 2020
Loop Capital Strong buy
Sep 30th, 2020
Benchmark BuyStrong buy
Sep 30th, 2020
Robert W. Baird Buy
Sep 30th, 2020
Stifel Nicolaus Strong buy
Sep 30th, 2020
Truist Neutral
Oct 1st, 2020
KeyCorp BuyBuy
Oct 1st, 2020
Mizuho Strong buy
Oct 1st, 2020
Needham & Company LLC Strong buy
Oct 6th, 2020
Goldman Sachs Group Neutral
Oct 13th, 2020
China Renaissance Securities Neutral
Oct 15th, 2020
Royal Bank of Canada Strong buy
Oct 20th, 2020
Barclays Buy

Technical analysis

Since last March, Alibaba has been drawing an uptrend that by now marked a gorgeous 82.36%. During this uptrend, the price gave some buy points on the breakouts. Latest low was in late September, when price bounced at $264.56. Alibaba broke out above $299.00 (its last top) on October 8. That breakout was a good entry point

$BABA at All-time Highs

Alibaba did it again, and hit all-time highs (ATH) on Wednesday at $314.00. Stock hit new all-time highs 3 times in the last 2 weeks

SMAs overview

A favorite tool of many trading systems are the moving averages, that easily show market momentum. A moving average is the average price of a stock over a set period of time. Moving averages are usually calculated on different periods depending on the trading timeframe 21, 50, 100 and 200 days are the most usual moving averages

BABA SMAs chart

Supports and resistances

Investors use supports and resistances as a way to spot price points in the stock price action that may act as barriers, containing the price of a stock to move up or down. Supports are levels where the price tends to stop as it falls. This means that the price is more likely to "rebound" this level rather than break through it. However, if the price breaks down the support, it will probably continue descending until approaching another support level. In contrast, resistances are where the price tends to find resistance as it moves up. Again, this means that the price is more likely to "rebound" at this level, and if it finally crosses this level, it will climb more easily until it finds the next resistance

Price is at all-time highs and there are not upper resistance levels.

The current support levels are:

  • S1: $299.00 (-3.52% below)
  • S2: $268.00 (-13.53% below)
  • S3: $264.56 (-14.64% below)
  • Bollinger bands

    So-called Bollinger bands are a well-established studio designed by John Bollinger. It comprises three bands that are plotted superimposed on the price evolution chart:

    • The central band is a moving average, usually a simple moving average calculated with 20 periods
    • The upper band is calculated by adding to the value of the simple moving average 2 times the standard deviation of the moving average
    • The lower band is calculated by subtracting from the simple moving average 2 times the standard deviation of the moving average

    Since the price surpassed the upper band on October 13, the price sliced by 0.03%. The price is trading near to the upper Bollinger band, poiting some level of overbought in recent sessions. This is not a bearish indicator, as price can move in these levels for many days and weeks

    BABA RSI chart

    Relative strength index

    The RSI (Relative Strength Index) is an oscillator-type indicator that gauges price fluctuations to reveal when the share or financial asset is overbought or oversold. Oscillator indicators, such as relative strength, are intended to indicate values in the range of 0-100. The relative strength indicator is one of the best known and most widely used indicators, invented by J. Welles Wilder in 1978

    The RSI dropped below the overbought level of 70 on October 14 after just crossing to the overbough zone for a single day (weak signal). The RSI reading today was 65.07. Alibaba price scarcely changed a 0.37% since RSI lost the overbought zone

    BABA RSI chart

    Earnings and financials

    In mid-August, Alibaba Group Holding Limited ($BABA) posted EPS for fiscal first-quarter that slightly enhanced Market expectations. Quarterly EPS was $14.82 per share from an estimated $13.77. This Q1 report represents an earnings surprise of 7.63%.

    Compared to the same quarter last year, EPS was $12.55, so current EPS is a improvement of 18.09%.

    Alibaba ($BABA) is releasing quarterly financial report on Friday next week. Analysts predict an earnings a share of $2.14, that is a 85.56% lower than Q1.

    BABA revenues and profits chart