There are always bulls and bears when it comes to China’s Alibaba (NYSE:BABA). But for risk-averse investors seeking stronger long or short Alibaba stock opportunities, it’s time for a “wait-and-see” approach.
Let me explain.
Many bulls liken BABA to Amazon (NASDAQ:AMZN) because the company’s diversified dominance in Asia’s cloud, e-commerce and financial markets and its most recent earnings success are all but guaranteed supports for maintaining long exposure.
Even buzz of a reverse split and listing of Alibaba shares in Hong Kong sometime within the next year have been spun as positives. Optimistically, smaller price-conscience investors, Chinese buyers unable to buy the U.S.-listed BABA stock and even arbitrage opportunities will lead to greater demand and profits for bulls.
On the flip-side and where actions speak louder than words, Alibaba bulls have done a poor job of late maintaining the faith. Despite Alibaba stock’s massive growth and easy top- and bottom-line beat in mid-May, shares continue to trade a few percentage points beneath its pre-quarterly report close.
Additionally, bears who have long maintained that financial shenanigans are behind much of BABA’s financial success can’t be faulted for questioning why Alibaba is exploring a stock split or raising capital with a Hong Kong listing if business is going as well as its looks on paper.
Time will tell who has it right in BABA shares. For now though, with this week’s uncertain G-20 front and center and a trade war on the Alibaba stock chart squarely at an inflection point, my vote is for bulls and bears to sit tight and play defense.
Alibaba Stock Weekly Chart
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More than a few of my colleagues at InvestorPlace are happy to recommend buying and selling Alibaba stock in front of the G-20. But I’m cautioning investors to wait … and for good reason, with shares situated in no-man’s land on the price chart.
Currently, BABA stock is near the key 50% retracement level of its corrective base formed this past year. It’s the technical equivalent of seeing the glass as half full or half empty. In conjunction with this level lining up with a handful of swift bullish and bearish price reactions over the past two years, it’s hard to say which camp will win control over this key battle line near the $170 level, plus or minus a couple of percent.
But that’s not necessarily a bad thing.
My technical takeaway is whichever side does claim victory, the ensuing price action will prove critical to a longer-lasting bullish uptrend or bearish market developing in 2019’s second half. Having said that, let the other guy or gal gamble. For now, risk-averse investors should simply wait. Once a weekly resolution is in place, the decision to buy or short BABA stock is going to look a good deal less chancy and, in my estimation, profitable for either bulls or Alibaba stock bears.
Disclosure: Investment accounts under Christopher Tyler’s management do not currently own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. . For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.
