Alibaba Flirting With Major Resistance

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 $0.77 at $88.98 in Wednesday's session. It has been a volatile few days for the issue as the Street digests the future implications if the IRS changes its stance on the Yahoo! Inc. YHOO tax-free spin-off of its stake in the company.

For now, the Street is taking a liking to Alibaba if the proposed changes are actually put in place.

After spiking higher of the news in Tuesday's session, it has had some follow through in Wednesday's trading action.

See Also: Yahoo Says Alibaba Spin-Off Is On Track, Shares See Relief

The issue, which has been range bound between $84.49 and $89.29 since its Q1 beat, is once again approaching the upper-end of the range, reaching $89.19 before falling back under $89. This is the second attempt in the last two days, as it peaked at $88.80 on Tuesday.

Both today's rally and Tuesday's took place on heavier than average volume. So far, 15.7 million shares have changed hands compared with its five-day average of 14.9 million, with three hours left to go.