- BABA is set to surge on Monday. Is risk back on?
- Chinese tech stocks look undervalued after serious falls in September.
- China tech names still face increased regulatory scrutiny from Chinese authorities.
Alibaba (BABA) stock has surged recently and that looks set to continue on Monday if movements in Hong Kong overnight are anything to go by. We had issued our buy-the-dip recommendation on October 5 at $134, but unfortunately the stock appears to have bottomed out at $139, so we have missed the boat. Risk aversion was the theme for much of September, and this followed through into October. Some bargain hunting appeared to be back on the cards with some more retail risk on trading pushing a strong rally in Chinese tech names last week. This helped BABA stock in particular surge from below $140 to over $160 on Friday.
-637695422394922025.png)
Alibaba (BABA) 15-minute chart
What we always look to see in a trend is who is in charge of that trend. Large candles show who is in charge, and the small body candles are indicative of a lack of power. Clearly above, the green candles have large bodies showing bulls are definitely in charge of this recent move. The red candles are smaller with short bodies. The bears have no power here.
Alibaba (BABA) stock news
Friday's rally was even more impressive (BABA stock closed up over 3%) as Goldman Sachs had cut its price target for the stock on Friday. Goldman cut its price target from $303 to $253. Monday has seen fellow Chinese tech stock Meituan surge in Hong Kong as the Chinese regulator fined the company less than analysts had feared. This has led to a relief rally for many Chinese tech names in Hong Kong. As we have repeatedly said, markets hate uncertainty more than bad news. This removed uncertainty from Meituan.
Separately, it also came to light that Charlie Munger, he of Berkshire Hathaway fame, has increased his investment in Alibaba (BABA) stock in the last quarter via his Daily Journal Corp. Daily Journal Corp increased its holding by over 83% in Q3 2021 by purchasing an additional 136,740 shares.
Alibaba (BABA) stock forecast
We have to turn bullish on BABA following the move on Friday. Baba stock is now trading above the 9 and 21-day short-term moving averages. The Relative Strength Index (RSI) is above 50, and the Moving Average Convergence Divergence (MACD) has crossed and is giving a bullish signal. Volume has also increased during the move higher. Breaking $170 will really add to the move and attract more traders to chase BABA higher, possibly some longer-term investors also.
FXStreet View: Bullish but would like to see $170 broken this week to confirm.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD consolidates near 19-month peak as traders await US PCE Price Index
AUD/USD oscillates in a range below the 0.6900 mark, as traders opt to move to the sidelines ahead of the US PCE Price Index. In the meantime, the RBA's hawkish stance, the optimism led by additional monetary stimulus from China, the prevalent risk-on mood, and a bearish USD continue to act as a tailwind for the pair.
USD/JPY holds above 145.00 after the Tokyo CPI inflation data
The USD/JPY pair attracts some buyers to near 145.20 on Friday during the early Asian session. The pair gains ground near three-week highs after the Tokyo Consumer Price Index. The attention will shift to the US Personal Consumption Expenditures Price Index for August, which is due later on Friday.
Gold price holds steady near record peak; looks to US PCE data from fresh impetus
Gold price consolidates below the all-time high set on Thursday amid overbought conditions on the daily chart and the risk-on mood, though dovish Fed expectations continue to act as a tailwind. Bulls, meanwhile, prefer to wait for the release of the US PCE Price Index before placing fresh bets.
Ethereum investors show bullish bias amid ETF inflows and positive funding rates, exchange reserves pose risk
Ethereum traded around $2,640 on Thursday, up more than 2% following increased bullish bias among investors, as evidenced by ETH ETF net inflows and an uptrend in funding rates. However, investors may be wary of a potential correction from ETH's rising exchange reserve.
RBA widely expected to keep key interest rate unchanged amid persisting price pressures
The Reserve Bank of Australia is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.
Five best Forex brokers in 2024
VERIFIED Choosing the best Forex broker in 2024 requires careful consideration of certain essential factors. With the wide array of options available, it is crucial to find a broker that aligns with your trading style, experience level, and financial goals.