Alibaba (BABA) – Get Report has been a total dog so far this year. Shares were trading well into the fourth quarter of 2020 but then a string of issues pummeled the stock.
Regulators disrupted Ant’s initial public offering, then dug deeper on Alibaba and dialed up the heat.
Investors don’t like regulatory issues as it is but particularly when we’re dealing with Chinese regulators.
However, in April, Alibaba paid a smaller-than-expected but still record fine, hoping to puts its regulatory issues behind it. Still, the stock hasn’t responded the way bulls were hoping.
All of this comes as the S&P 500 and Nasdaq continue to grind out new all-time highs.
It also comes as FAANG stocks continue to trade incredibly well. Alphabet (GOOGL) – Get Report is the top performer with a near-40% gain in the first half of the year, while Netflix (NFLX) – Get Report is the worst, with a 2.3% drop.
Alibaba has a similar first-half performance, down 2.6%. However, it’s doing far worse from the highs, down more than 30%.
Can it turn around its woes in the second half and start rallying higher?
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Call me a hopeless optimist, but I feel that Alibaba can have a solid second-half performance.
The overall market has done too well and so has large-cap tech. The fundamentals of the business are intact and growth is strong. It’s like Amazon (AMZN) – Get Report. Eventually, it will perform better – it’s a question of “when” and not “if.”
Shares continue to hold the $210 to $212 area and have recently cleared downtrend resistance (blue line). That said, there’s plenty of overhead hurdles.
Specifically, Alibaba stock is struggling with the 21-week moving average, as well as the 21-month and 10-month moving averages.
Let’s be clear: There are not a lot of bullish technical components here. If Alibaba stock could hold the 10-week moving average on this week’s dip, I’d feel better about it.
However, as long as it can hold up over the $210 level and really, the 200-week moving average, I feel okay about Alibaba going into the next six months.
A push over $235 – thus putting it over all of the moving average hurdles mentioned above – could open up a run to $250, then $263. Above $275 and $300 is in play.
Keep the risk in mind but this could be a solid second-half rebound play.