Alibaba (BABA) is now working on its 50-day moving average. Here’s how to trade it. (December 09, 2014)
I want to look at Alibaba ( NYSE:BABA ). Just a few days ago this stock actually gave birth to the 50-day moving average. Right here on 11/28/14 was the first day that the stock traded for the 50th day so you got an average. This matters, because the stock is well above this, what I call enthusiasm high, which here turned out to be the first day, broke out and it’s still above this level here. So right now this $100.00 level essentially coincides with the 50-day moving average, this is a real good technical indicator. If you look at the daily volume, volume was pretty high today, higher than it’s been since this last big sell-off.
So what I’m suggesting is that you can buy Alibaba ( NYSE:BABA ) right now, there are a few Chinese people over there who are actually buying stuff online, if you can believe that. The market thinks these guys are going to be making a lot more money than anticipated early on here. So I think you can buy this stock right here, as long as, and you know what I’m going to say, I always do, as long as you keep a stop a little bit below this level.
You could even keep a stop under $100.00, because frankly if the stock tests the 50-day moving average and maybe falls a little bit below it, if you’ve got your stop too tight then you get stopped out just before the stock falls to that $100.00 level, where there are a bazillion people waiting to buy it because they’re saying, “Hey! If Alibaba gets back to 100.00 I’ll buy.” I’ll guarantee you that there are more folks saying that than saying, “Hey! If Alibaba gets back to the 50-day moving average I’ll buy.”
So somewhere down here you just want to keep your stop, that’s it. But the stock is, in my view, consolidating. But the way it traded today I think the path of least resistance here is going to be up, as long as the overall market cooperates.
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