Alibaba Group Holding Ltd. (BABA) is due to report its latest quarterly numbers before the opening of trading Tuesday. When we last looked at BABA on Nov. 4 we wrote that, "The charts of BABA tell me that the risks of ownership have gone up. Stops should be raised to $279 from a close below $260. With the entire world seeming to be in flux now we could see another 'shoe drop' on BABA at any time -- probably while our markets are closed."
The Point and Figure chart showed a downside price target "in the $245 area" at the time but prices fell still further and broke below the 200-day moving average line.
How do the charts look now? Let's check.
In the daily bar chart of BABA, below, we can see that the shares plunged to near $210 in late December followed by a rebound in January taking BABA back above the 200-day average line and the 50-day moving average line. The trading volume was very heavy at the late December low as some traders may have been dumping long positions as support from July and August was broken. As BABA has rebounded in recent weeks the On-Balance-Volume (OBV) has made an uneven recovery.
The Moving Average Convergence Divergence (MACD) turned bearish by mid-November but is now crossing above the zero line again for a buy signal.