Alibaba (NYSE: BABA) shares have recorded a remarkable seven consecutive days of stock gains, marking its longest streak in more than a year. Yet, despite these positive indicators, Alibaba’s shares remain significantly down from their late-2020 peak, largely due to regulatory pressures and economic challenges in China
Alibaba’s shares rose by 2% in U.S. premarket trading on Friday, reaching a price of $75.11 at market close—an increase of 0.64% from the previous day. This performance is notable as it stands out against a general downtrend in major market indices; the S&P 500, Dow, and Nasdaq fell by 0.46%, 0.98%, and 0.64%, respectively.
Over the past month, Alibaba’s stock has climbed by 4.25%, significantly outperforming the Retail-Wholesale sector’s 3.05% decline and the S&P 500’s 3.04% drop. Despite these gains, the stock remains close to multiyear lows, indicating cautious optimism among investors.
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A significant factor contributing to this trend is Alibaba’s aggressive financial strategy. Recently, the company announced a $4.8 billion share repurchase, its second-largest buyback ever, completed in the quarter ending March. This move followed a substantial increase in its share buyback program to $25 billion in February, aimed at bolstering investor confidence amid ongoing competitive pressures and growth concerns.
Future outlook and expert views
Gurgavin Chandhoke, CEO of uINVST, expressed his positive outlook on X (formerly Twitter)
This sentiment reflects a broader confidence in Alibaba’s resilience and potential for recovery despite facing significant hurdles.
The sustainability of Alibaba’s recovery, however, is contingent on broader economic conditions in China, including government actions that might affect the market. This week, for instance, rumors that the People’s Bank of China might engage in monetary easing temporarily boosted Alibaba’s shares, although the central bank later clarified that its bond trading initiatives were intended to manage interest rate risks, not to implement quantitative easing.
Technical analysis
The technical analysis indicates a bullish trend characterized by notable volatility. The overall trajectory is upward, as evidenced by the stock forming higher highs and higher lows throughout the month. The primary support levels are identified between $69 and $70, where the stock has repeatedly rebounded. Conversely, resistance levels are observed in the $75-$76 range, which the stock has tested several times but has yet to convincingly surpass.
Currently, the stock is trading above its 20-day and 50-day simple moving averages, signaling bullish trends in both the short and medium term. However, the Relative Strength Index (RSI) has exhibited significant fluctuations, dropping to as low as 17 on April 15th and soaring to 83 on April 23rd. These movements indicate that the stock has alternated between oversold and overbought conditions throughout the month.
The stock has shown moderate volatility, with an average daily range of approximately $1.50-$2.00, and trading volumes have been relatively high, suggesting strong liquidity and investor interest.
In short, the technical analysis presents a generally bullish outlook for BABA USD in the short to medium term, with potential for the stock to overcome the resistance at $75-$76. However, the pronounced fluctuations in the RSI suggest periods of high volatility, which traders should monitor carefully.
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Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
