Alibaba Rallies Off Earnings Beat: A Technical Look

Joel Elconin is the co-host of Benzinga's #PreMarket Prep, a daily trading idea radio show. Alibaba Group Holding Ltd BABA shares were trading higher by $6 (7.3 percent) at $86 in Thursday's session. The catalyst for the rally is better-than expected Q4 results for EPS ($0.43 vs. $0.42 estimates) and sales ($2.811 billion vs. $2.77 billion estimates). The issue, which breached its major support at $80 on Tuesday by reaching $77.77, rebounded on Wednesday to close right at $80. The breach of $80 on Tuesday may have attracted a host of short-sellers as the issue made a new all-time low. Those sellers were trapped today off the favorable report and added to the monster rally during the pre-market session that took the issue as high as $89.71. However, after a sharply higher open, it rallied to $89.29 before sharply reversing course. So far, it has declined to $85.07 and is attempting to re-enter the $86 handle. Today's rally is taking place on much higher than average volume. It has already traded 44 million shares versus its 20-day average of 18.2 million with nearly fours left in the day.