The Chinese market has seemingly been teetering on the brink of collapse since the COVID-19 pandemic, with bloodbaths being particularly notable in early 2024.
The late September news – as vague as it was – that the Chinese government would provide a generous stimulus package reversed the situation overnight and led to a massive rally for the nation’s equities.
Perhaps the biggest winner of the change is simultaneously the biggest position of ‘The Big Short’s’ Michael Burry: Alibaba (NYSE: BABA).
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Alibaba stock records massive 12-month gains
Indeed, BABA stock managed a remarkable 82.37% rally in the last 12 months and is, at $134.64, up 58.80% in 2025 alone.
In comparison, Nvidia (NASDAQ: NVDA) – one of the most popular stocks in the world – rose 26.98% in the last 52 weeks and is 16.05% down year-to-date (YTD).
Still, it is notable that not all of Alibaba’s shares’ climb can be attributed to the government stimulus. The company also started establishing itself among the major artificial intelligence (AI) firms with the release of its Qwen 2.5 model shortly after DeepSeek’s R1 came out.
Despite the positive performance, it would appear, by press time on March 21, that between the Chinese market’s previous woes and BABA’s staggering rise, many traders remain unconvinced that the good times will last.
Short volume ratio hints at deep Alibaba stock correction
Alibaba stock’s short volume ratio has been above 50 every day in the last two weeks. Furthermore, even though it fell from the time frame’s high, it remained at a high 55.65 as recently as March 20, per the data Finbold retrieved from Fintel on Friday, March 21.
Though an increase in short positions often accompanies strong stock market performance, there is some indication that it will have preceded a major downward move. March 17 not only featured the second-highest ratio – 63.08 – of the last two weeks but also marked the day a strong BABA correction started.
Specifically, Alibaba stock climbed to $147.57 on the day only to decline 8.76% to $134.64 within four days.
The notion that BABA shares’ rally might not hold – particularly for the firm’s American depository – is lent additional credence by the headwinds and recessionary fears plaguing the U.S. market.
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