This Has Me Interested In Shorting Alibaba $BABA

Shares of Alibaba Group Holding Ltd (NYSE:BABA) jumped higher this past Friday morning after reporting solid earnings Thursday after-the-close. However, the party was short lived. After an initial pop higher, the stock reversed off all-time highs, putting in what is known in the technical analysis world as a topping tail. Topping tails are VERY bearish signals of potential long-term tops.

 

Today, the stock is doing exactly what pro investors would hope, it is bouncing higher, retracing the tail. The reason an up-day today is beneficial is because it allows for investors shorting Alibaba Group Holding to get a higher entry point and it tightens the stop on the trade. The stop is any daily close above the topping tail high. In this case, the high was $126.40. With the stock currently trading around $125.40, this gives investors a tight $1.00 stop with the potential for a major move down to $104.50. How about that risk/reward? Pretty solid. Ultimately, this is a great bearish topping signal on Alibaba Group Holding and investors can look for a short, if interested.

 

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: