On Wednesday Alibaba Group Holding, Ltd. (BABA) is due to report its latest earnings. During Friday's Mad Money program, Jim Cramer was positive on the company as the Chinese continue to bolster their economy. Let's ignore the tweets and see what the charts suggest.
In this daily bar chart of BABA, below, we can see that a number of our favorite indicators have weakened. BABA has broken the lows of March and is trading below the declining 50-day moving average line.
The 200-day moving average line has been in a downtrend for much of the past year and is not far away from current levels.
The trading volume increased this month as prices slumped and the daily On-Balance-Volume (OBV) line is below the zero line in sell territory.
In this weekly bar chart of BABA, below, we can see that the rally this year has stalled in the 2017/2018 resistance zone that extends up to $210. The 40-week moving average line is in a downtrend and prices look like they can decline to retest that line.
The weekly OBV line is unable to make a new high and the MACD oscillator is nearly crossing over to a take profits sell signal.
In this Point and Figure chart of BABA, below, we can see a downside price target of around $150 being projected.
Bottom line strategy: I do not have any special knowledge about BABA's earnings nor the pace of the Chinese economy, but I can suggest that the technical position of BABA is weak ahead of earnings.