Jim Cramer responded to callers during the Mad Money "Lightning Round" Tuesday evening. One caller asked about Alibaba Group Holding (BABA) : "I think you should buy this one and put it away," Cramer responded.
We looked at BABA on May 13 and wrote that "It looks like the decline in BABA is over and the long-term uptrend should get going again. Aggressive traders could go long at current levels risking to $200. Others should wait for a weekly close above $225 (a close above the high of the low week)."
Let's check the charts again.
In this daily bar chart of BABA, below, we can see that prices are still in a downtrend but prices have started to stabilize well above our $200 stop out point.
The moving averages are late and still negative but the On-Balance-Volume (OBV) line is trying to bottom and the Moving Average Convergence Divergence (MACD) is about to cross to the upside for a cover shorts buy signal.
In this weekly Japanese candlestick chart of BABA, below, we find some encouragement. There is a lower shadow below $210 and the two most recent candles are doji or small spinning tops that tell us that buyers and sellers of BABA are balanced.
The weekly OBV line is holding above the December low and the MACD oscillator has narrowed closer to a cover shorts buy signal.
In this daily Point and Figure chart of BABA we can see that prices have reached their price target in the $209 area. A rally to $218.10 or higher will improve the picture.
Bottom line strategy: Traders should continue to hold longs from our May 13th recommendation. Keep the stop loss at $200. Add to longs or initiate longs on strength above $218.10.