Quick update on Alibaba Group Holdings (NYSE: Baba) technical chart.
Do note that this is based on the NYSE US listed chart so if you’d like to convert them into HK figures, the ADRs to note is 1:8 with an exchange rate of about 7.75. So Baba’s share price at $160 in the US would be equivalent to US$160 / 8 x 7.75 = $155.
First, let’s take a look at the Fibonacci retracement level.
This is based on weekly chart – we have now retraced and broken the 78% percentile which was previously at $170. The stock closed at yesterday closing at $160.
In terms of recent price action over the past couple of days, this resembles a capitulation where there are a huge increasing spike in volume accompanied by empty gaps in between the drop. This means that there are relentless selling throughout and it is likely that many people get stop out from their stop loss. This could also indicate margin call scenario where retail investors are being pulled out and asked to deleverage from these tech counters.
If we take at similar price action back in the 2018 plunge and the more recent 2019, the drop over the 5 days period is also accompanied with increasing huge volume so we may be looking at pretty much the same sort of scenario.
From the weekly chart support, we have broken the last COVID low and may now be heading towards the next immediate support at $148 range. If we failed that, then we may test the ultimate support which is at $129, the support held during the 2018 plunge.
Do remember that we may or may not go there so it is not always a certainty. The fundamentals of the company has since improved from what we saw back in 2018 and 2019 even with all the regulations factored in so from a valuation perspective we are getting an attractive level even if the price action is higher.
For readers who did not follow my Facebook page, I have entered into my last batch position at $162 on the NYSE market yesterday night. Sure, it doesn’t give me the bottom which everyone in the entire world seems to be looking out for, but it has pushed my average price now to a decent level of ~ $190, which is in the zone of “I think I can live with this” scenario.