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Alibaba's Under-The-Radar Technical Breakout

Alibaba's Under-The-Radar Technical Breakout
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Another large-cap stock making new 2017 highs isn’t much of a story now that the “Trump Rally” has carried the SPDR S&P 500 ETF Trust (NYSE: SPY) up another 6.1 percent in 2017. However, at least one big tech stock is making new 2017 highs this week despite Trump, not because of him.

Alibaba Group Holding Ltd (NYSE: BABA) delivered its first close above $105 on Thursday, the first time since before Trump’s election victory. Trump’s isolationist and anti-free-trade rhetoric hit many China stocks hard in the closing weeks of 2016. While the SPDR closed out the final two months of 2016 with a 5.9 percent gain, Alibaba’s stock plummeted 13.2 percent.

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The Chinese e-commerce giant has since delivered a mostly under-the-radar comeback culminating with what could be a major technical breakout this week. Alibaba is now trading at its highest level since October and looks primed to soon test $110 resistance.

Alibaba reached as high as $109.87 in September 2016, its highest point since it rallied to $120 following its 2014 IPO.

For now, technical traders will be watching both $105 and $110 to see where Alibaba may be headed next. If the stock dips back down below $105, this week’s potential breakout may have simply been a false start, and the stock could soon re-test recent support at $100. If the stock’s momentum carries it above $110, Alibaba may be headed back for a test of all-time highs at $120.

After the Thursday close at $105.64, Alibaba is up another 0.5 percent in Friday trading.

Disclosure: the author is long BABA.

Image Credit: By Rico Shen, CC BY-SA 4.0-3.0-2.5-2.0-1.0, via Wikimedia Commons

Posted-In: China Donald TrumpLong Ideas Technicals Trading Ideas Best of Benzinga


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