Alibaba (BABA – Get Report) put together a quarter of the quarter and reported much better than expected fiscal fourth quarter. Despite that, the shares are less than 1.5% a day. What should investors do about this?
Believe it or not, shares in Alibaba actually went negative early on Wednesday's trading. This is despite earnings of $ 1.28 per share rising above expectations at 95 cents. Revenue of $ 13.93 billion hit analysts' expectations by $ 600 million and increased 51 percent the year after.
Considering that the stock fell more than 10% in the seven trading sessions that led to this huge earnings balance, one would think Alibaba's stock is a buy, buy, buy! Right?
If it was not for the recent escalating trading tension between the US and China ̵
Trading Alibaba Stock
When it's a trade deal, Alibaba and other Chinese stocks are likely to see a healthy rally. Until then, the Alibaba share gains may be subdued, though other major cap technologies have grown sharply. For example, Amazon (AMZN – Get Report), Alphabet (GOOGL – Get Report) and Microsoft (MSFT – Get Report) are up and running on Wednesday, climbing 1.2%, 3.5% and 1.25% respectively. Even Alibaba peer JD.com (JD – Get Report) is up 2.75%.
On the daily chart above you can see the strong breakout we had in the Alibaba stock when it broke over $ 188 and ran to $ 195. Likewise, we can also see the collapse, where stocks quickly lost 20-day and 50 -day moving average, as well as uptrend support that had been in play since February.
The Alibaba share didn't make it down to 200-day moving average, but as you can see below on the weekly chart, it jumped perfectly off of the 50-week moving average.
Amazon, Alphabet and Microsoft are holdings in Jim Cramer's Action Alerts PLUS Member Club . Want to be notified before Jim Cramer buys or sells AMZN, GOOGL or MSFT? Learn more now.
On a continuing rally, let's see if the Alibaba shares can come above their 10-week moving average of $ 181.57 and its 50-day moving average of $ 182.62. Over it and $ 188 and / or the back of previous uptrend support could be on the table. On the downside, I want to see the range of $ 168 to $ 170, with $ 170.73 being the 50% Fibonacci retracement in the 52-week range.
During this week's low and BABA share, it will be an immediate test with 200-day moving averages. If it fails as support, the 38.2% retracement of $ 161.07 will be on deck.
Unfortunately, much of Alibaba's price action can be driven by war crimes, although management reduces their influence on the conference call. See $ 181.50 for $ 182.50 upside and $ 170 for downsides.