Alibaba stock continues its strong recent run on Monday.
BABA stock closes up 1.5% but shies away from intraday highs.
BABA has struggled with increased Chinese attention and investor apathy.

Alibaba (BABA) stock was not so impressive on Monday, and it looks as if the recent run may be losing power. We had mentioned on Monday that this rally was led by strong green candles clearly identifying that buyers were in control. As we can see from the hourly chart below, while BABA did close higher on Monday it was not so strong. BABA opened near the high of the day and gradually slid lower for most of Monday. Look at those strong large-bodied red candles. Bears took charge on Monday. Crucially, the previous high from Friday though was not broken.

BABA 1-hour chart

BABA key statistics

Market Cap
$433 billion
Price/Earnings
20
Price/Sales
4
Price/Book
3
Enterprise Value
$589 billion
Gross Margin
38%
Net Margin

19%

52 week high
$319.32
52 week low
$138.43
Short Interest
2.6% Refinitiv
Average Wall Street Rating and Price Target
Buy 246.29

The Wall Street Journal reported on Monday that Chinese President Xi Jinping is looking closely at ties between Chinese state banks and large private companies. The WSJ article mentions DIDI, Ant Group and Evergrande. A notable headwind then coming after BABA had looked to shed some recent regulatory concerns. Good news had been welcome with Charlie Munger (Warren Buffet’s associate) having majorly increased his firm’s holding in BABA.

Monday’s call is proving a bit prophetic: “Bullish but would like to see $170 broken this week to confirm.” Monday’s high was $169.80! So back to bearish then? No, we will remain cautiously optimistic now and hope this latest setback will provide a buying opportunity. BABA has long faced scrutiny from Chinese authorities and can be said to be the original regulatory concern when the ANT Group IPO was put on hold.

The chart remains powerful with a strong rally from the lows. A pullback is fine so long as $155 is held. This will keep BABA stock above the 9 and 21-day moving averages.

FXStreet View: bullish above $155.

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