Shares of Alibaba Group Holding Ltd (NYSE:BABA) are higher by a stellar 20% year-to-date despite largely meandering sideways since late January. Like a great many momentum and growth stocks, BABA stock got an early vote of confidence by traders and investors alike out of the gates in January, then slipped into a constructive consolidation phase.
However, on Monday, March 13, Alibaba shares showed signs of life. The stock rallied 1.7% and marginally broke out of its two-month slumber.
Traders and active investors should take notice.
When I last discussed shares of Alibaba on Jan. 20, I offered two ways to trade the stock following the Jan. 24 earnings report. Specifically, I said that a gap and hold higher after earnings would offer a buying opportunity just like a gap lower after earnings could offer a trade to the downside. On Jan. 24, following the earnings report, BABA stock gapped higher and above the $98 I had laid out as a buying signal.
By day’s end yesterday, shares closed around $105.18. Thus, they’re well on their way toward my first upside target around $108.
BABA Stock Charts
Note that in June 2016, Alibaba stock successfully pushed pasty diagonal resistance that (lower purple dotted line), which by September had led to a near-retest of its previous all-time highs from late 2014.
The stock then pulled back but in late December found support at a critical technical area. This area was made up of the 50-week simple moving average (yellow, also roughly equating the 200 day moving average), as well as a 50% retracement of the entire rally from the February lows up to the September highs.
Through this lens and time-frame, BABA ultimately has a well-defend upside price target around the $120 mark. This upside price target would be a result of a simple Fibonacci extension move and also nicely lines up with the 2014 highs.