Chart Of The Day: Don't Be Fooled By Alibaba Dip-Buying, More Pain Still Ahead
Raymond James analyst Aaron Kessler pegs the company at 16 times expected 2021 earnings, very low for a company whose revenue leaped by 30%.
While we have no issue with the prospects for Alibaba climbing back up over the longer term, we're confident, based on the technical chart, it's headed lower first.
BABA just completed a down-sloping H&S top. In other words, the pattern was so weak, it failed to develop the right shoulder at the same levels as that of the left shoulder before supply overran demand.
Trading Signals
Conservative traders would wait for a full return move and proof of supply by the pattern.
Moderate traders would also wait for the price to get closer to the neckline, for a better entry, if not for confirmation for the pattern’s integrity.
Aggressive traders would short at will, according to what they could afford and their temperament.
Source: Investing.com
https://www.investing.com/analysis/char ... 02/01/2021