Alibaba Stock News and Forecast: BABA drops below critical $86 level in premarket

• SEC announced the non-compliance and possible delisting of five Chinese stocks last week.
• BABA shares fell below $86 in Monday's premarket.
• BABA dropped nearly 11% on Monday in Hong Kong.

Alibaba stock (BABA) is down close to 5% in Monday's premarket to $82.50. This relates to the ecommerce giant's shares dropping 10.9% in Hong Kong on Monday after worries that China will join Russia in its war against Ukraine, an action that could put Chinese firms on Western sanctions lists. BABA shares are now likely to drop under $86, a long-term support level for the stock. Last week the US Securities & Exchange Commission (SEC) announced the possible delisting of five Chinese companies that trade as American Depositary Receipts (ADRs) on US exchanges. Covid-19 shutdowns are in force in Shenzen and Shanghai as well, so many Chinese stocks are dropping due to the uncertainty of logistics and production schedules.

Also read: AMC Stock Price: AMC Entertainment on target to break $10

Alibaba Stock News: Russia asks for Chinese aid

Russia publicly asked China for aid in its war against Ukraine over the weekend. If China were to follow through, harsh Western sanctions already applied to Russia might be extended to Chinese individuals and companies. This also might create a larger global conflict.

Several other issues are also clouding the market for Chinese equities. The SEC's placement of five Chinese companies on its list of stocks in danger of being delisted is also continuing to worry the market. The SEC pinpointed Yum China (YUMC), ACM Research (ACMR), BeiGene (BEIGF), HutchMed (HCM) and ZaiLab (ZLAB) as companies that have failed to provide the SEC with financial audits, a requirement of the Holding Foreign Companies Accountable Act. The law in China says that these same companies must keep their audits within mainland China, which creates a catch-22 scenario.

The Hang Seng Tech Index dropped more than 11% on Monday in Hong Kong. The Golden Dragon Index, which tracks Chinese stocks that trade on US exchanges, dropped double digits on two consecutive sessions last week. This is the first time this has ever happened.

The Chinese government is forecasting GDP growth of 5.5% in 2022, which is far lower than the 8.1% figure seen in 2021.

Alibaba Stock Forecast: Finding support below $86

$86 served as support for BABA stock back in late 2016 and halted the stock's 6.7% drop on Friday when shares closed at $86.71. Dropping through here to $82 in Monday's premarket signals that support at $86 was brief.

Though there is some support near $81, which formed a swing high in the spring of 2016, the only strong support seems to be the all-time low range between $57.20 and $59.25. This demand zone provided support to BABA in August and September of 2015 and then again in February of 2016.

Making it back above $86 will make Alibaba neutral in the mind of FXStreet analysts, and breaking above $109.76 will restart a bullish trend.

BABA 1-week chart