What is not to like about Alibaba?

• Posted by Greg Harmon
• on December 10th, 2015

Prior to 2 years ago when I thought of Ali Baba it was immediately followed by …and the 40 Thieves. It summoned up gold and riches and magic carpets like in the illustration above. What a splendid image.

Now it brings an image of Jack ma to mind, and frankly, that is a bit scary to me. But with the pullback in the stock ended at the start of October, the stock is looking interesting. And now Jack Ma’s face is starting to look like a pile of gold.

The chart above shows 4 reasons to consider buying some. The first is the price back at resistance for the 3rd time at 85.60. This time from a higher low and shallow pullback. The second is the Inverse Head and Shoulders pattern it is creating. A break of the neckline shown would give a price objective of at least 113.85. Next, the momentum indicators are bullish and turn more so.

The MACD has halted a move lower and remains in positive territory, while the RSI is in the bullish zone and trending higher. Finally the 50 day SMA is about to cross up through the 200 day SMA, a Golden Cross. These bullish signals suggest it is time to own the stock on a move over 85.60.

Disclosure: I put on a long position via a December/March 90 Call Calendar on Wednesday.

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