At a Glance
- Alibaba has completed a 71-day consolidation pattern
- The stock has broken above a 96.17 buy point
- Volume surged 90% above average on the breakout
- Why it matters: The move signals potential institutional buying interest
Alibaba’s stock has cleared a key technical hurdle, ending a 71-day base and pushing above a 96.17 buy point in heavy volume. The breakout follows months of tight trading ranges that formed after the stock’s 2023 lows.
Breakout Details
Shares closed at 98.02, up 3.4% for the session. Volume jumped to 24.8 million shares, roughly 90% above the 50-day average. The move took the stock past the 96.17 cup-with-handle entry identified in News Of Los Angeles‘s market analysis.
The base began in early September after the stock rebounded from a 52-week low of 71.07. Since then, Alibaba has carved out higher lows while resistance held just below 96.
Institutional Support
Fidelity Contrafund, one of the largest actively managed mutual funds, added 2.3 million shares in the latest reporting period, lifting its stake to 0.8% of the portfolio. Other large holders include Dodge & Cox Stock Fund and Vanguard Total Stock Market Index Fund.
Options activity also turned bullish. Call volume at the 100 strike expiring this week hit 42,000 contracts, more than triple the put volume at the same strike. The call-to-put ratio for the series stood at 2.1 to 1.
Earnings Outlook
Wall Street expects Alibaba to report fiscal Q3 earnings of $2.18 per share when results arrive in early February. Revenue is seen rising 6% to $36.7 billion. Management guided for full-year revenue growth of 5%, citing softer consumer spending in China.
Cloud revenue, a key growth driver, grew 3% last quarter to $3.9 billion. The division remains profitable, with operating margin holding near 3% despite price competition from state-backed rivals.
Risk Factors
Regulatory overhang persists. China’s cyberspace regulator last month proposed new rules requiring large platforms to submit algorithms for review. While Alibaba has not been singled out, the framework could add compliance costs.
U.S. delisting fears have eased. The company submitted audited financials to the SEC under the Holding Foreign Companies Accountable Act and remains in compliance with disclosure requirements.
Technical Levels
Next resistance sits at the 108 level, the August reaction high. Support is the 50-day moving average, now rising near 92. A close below that line would raise questions about the breakout’s durability.
Relative strength has improved. The RS line, which tracks performance versus the S&P 500, hit a six-month high last week. The stock still trails the market by 12% over the past year.
Key Takeaways
- Alibaba’s 71-day base completed with above-average volume
- Institutional buying emerged through mutual fund additions
- Earnings expected in February with modest growth forecasts
- Regulatory and delisting risks remain contained for now
