During Monday's Lightning Round segment of Mad Money one caller asked Jim Cramer about Alibaba Group (BABA) . "This is a tremendous capitalist company in a communist country. I'd stay away," was Cramer's advice.
In our last review of BABA on May 26 we wrote that, "Traders should continue to hold longs from our May 13th recommendation. Keep the stop loss at $200." BABA broke below $200 in early July so I will assume traders booked a loss at that point in time.
Let's check the charts again.
In the updated daily bar chart of BABA, below, we can see that the decline in the stock was orderly until recently. Prices have declined quickly with a number of downside price gaps telling us that traders are anxious to sell. The slopes of the 50-day and 200-day moving averages are bearish.
The On-Balance-Volume (OBV) line is pointed down again and close to the May low and perhaps a new low. The trend-following Moving Average Convergence Divergence (MACD) oscillator is bearish.