Alibaba Group Holding Limited (BABA)

Alibaba stock forecast: buy or sell

Alibaba stock outlook

  • After reaching new all-time highs last Thursday, Alibaba closed today at $248.58 sliding a -1.23%
  • The stock is configuring an uptrend pattern since late March, when it bottomed at $169.95. Up to date, the uptrend marked a 46.27% gain since the beginning of this rally
  • Alibaba Group Holding Limited, through its subsidiaries, provides online and mobile commerce businesses in the People's Republic of China and internationally.
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Important note:
The comments published in this article are personal and should not be followed as recommendations for you to buy or sell stocks. The author of this paper does not have any knowledge of the particular situations of the reader, his or her finances or what is in his or her best interest at any given time. All users should speak with their financial advisor before buying or selling any securities Opinions are expressed for informational motives only

Alibaba stock chart overview

Should I buy Alibaba stock?

All successful traders recommend adhering to a trading strategy and not make decisions based on subjective opinions, rumors or feelings. 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?

In the current situation of Alibaba there is not any eligible buy setup. This doesn't mean we expect a selloff for BABA in coming sessions, or that it may not climb higher. Simply, it doesn't match our recommended trading systems

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Should I sell Alibaba stock?

When is it time to sell Alibaba stock?. Trading strategies give us the ability us to avoid impetuous decisions based on our personal emotions or the buzz that surrounds the market. When selling, as well as buying, our setups are very easy to use but are only applicable for selling shares in your porfolio, not for selling short BABA stock

A golden rule is that you should never keep a trading operation that shows a losses greater than those expected at the time of the buy. The moment to sell your stock should always be determined by the stop-loss (automatic or manual)

Is it time to sell Alibaba stock?

In the current situation of Alibaba there is not any eligible sell setup, so Alibaba stock holders with operations in profit can keep their positions

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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 month, just one brokerage rating was published for Alibaba

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Alibaba ratings

Brokerage firmRating
Jun 19th, 2020
Barclays BuyBuy

Technical analysis

Alibaba shares started an uptrend in late March, and grew a gorgeous 46.27%. The chart shows higher highs and higher lows, and along the way gave some entry points for those who wanted to trade in. Latest low was on June 29, when price bounced at $211.82. Like in all uptrends, price needs to take breath and now price is consolidating the gains in a range between $268.00 and $211.82

BABA at All-time Highs

Last Thursday, Alibaba hit new all-time highs (ATH) again at $268.00. It's the 3rd time in the last 10 sessions, marking an important rally

SMAs overview

A favorite tool of many traders are the moving averages, that easily show trend direction. 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. You can found more about Moving Averages from sources like Wikipedia and Investopedia

Supports and resistances

Technical analysts use support and resistance levels as a way to find price points in the stock price action that tend to behave as barriers, containing the price of an asset 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 declining until meeting another support level. In contrast, resistance levels are where the price may find resistance as it rises. In the same way, the price is more liable to "rebound" at this level, and if it finally breaks this level, it will rise more easily until it finds the next resistance

The current resistance levels are:

  • R1: $268.00 (7.81% above)
  • The current supports are:

  • S1: $231.14 (-7.02% below)
  • S2: $226.70 (-8.8% below)
  • S3: $221.16 (-11.03% below)
  • Bollinger bands

    This is an indicator that was created in the 1980s by John Bollinger. In essence, the Bollinger Bands are lines that move around a moving average, ranging the distance from the bottom to the top depending on market volatility. They are usually drawn by an offset of two standard deviations, above and below, from a moving average line. Bollinger himself recommends the moving average period to be 20

    Since the price surpassed the upper band last Friday, the price dropped by 5.09%

    Relative strength index

    The Relative Strength Index is an oscillator-type indicator that gauges price fluctuations to detect when the price of a share or financial asset is oversold or overbought. Oscillator indicators, such as relative strength, are designed to indicate values in the range of 0-100. J. Welles Wilder introduced the relative strength indicator in the late 1970s and since then it has been widely used by investors

    The RSI dropped below the overbought level of 70 yesterday after just crossing to the overbough zone for a single day (weak signal). The RSI reading today was 63.23

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    Earnings and financials

    Alibaba had the quarterly financial call and presented the Q1 report in mid-May. Alibaba posted 1st-quarter earnings of $9.20 per share on sales of $114.3 billion. The Wall St estimate was $6.05 per share on revenue of $107.5 billion.

    Compared to the same quarter one year ago, EPS was $8.57, so reported EPS means a improvement of 7.35%. Sales exploded a 22.26% on an annualized basis in the 1st-quarter, from $93.5B to $114.3B last quarter. Alibaba reported 3 YoY quarterly results in green, improving sales by 1463.8% from $7.3B on 2017-Q2.

    Alibaba is hosting the Q2 earnings call on mid next August. Estimated EPS for this quarter is $13.77. If you own or you are looking to buy Alibaba shares, you must be careful as financial reporting day usually has a very high volatility, and price can soar and sink with very low liquidity and not honouring your buy/stop-loss orders. It's always good to review company's website to confirm time and details on the earnings call and the earnings report.

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