June 28 UPDATED - Members Trade
BotTrigger Trade Update: $BABA
Tomorrow we'll likely be entering back in this name for too many positives that have developed since we last sold this @ the $140 level. We'll likely be considering the 2018 Jan 130 deep-in-the-money straight calls, which are currently trading around $22 or the 2018 January 140/160 Call Spread for around $8.50 currently. This call spread stands to make 135% so long as BABA closes at $160 or higher upon expiration. The breakeven on this trade would be BABA @ $148.50 (low strike + cost of spread). The June positions is only about a quarter more believe it or not. So for en extra $25 per contract you get a whole 6 months of time on your side. However, the June spread will take much longer to appreciate than the January spread. We believe that BABA is right at the precipice of pumping higher and we'll explain why.
Our first buy alert on BABA was @ the $96 area then another buy alert back around $111 area. We then sold it at the $140 area for an incredible gain on what looked like a strong bearish reversal on the broader market. However, that gap up to the $140 level has now held for 20 days now. That's a formidable vote of confidence. Take a look below:
What we don't want is to run into a situation where BABA takes off without us here. It's perhaps one of the strongest of setups. We sold this around $140 but if proven otherwise we can always get back in.
The technical & fundamental momentum is too strong to not be involved on the long side. The stock was upgraded by Barclays from $141 to $175 citing personalized marketing, new retail initiatives, a massive shift from offline that’s well above western penetration, and seamless integration with Ant Financial and Cainiao Logistics. ‘Given BABA’s scale, it’s hard to find alternative investment opportunities at a similar growth rate globally. We continue to see upside to BABA shares from core retail, AliCloud and other investments…’ Barclay’s $175 price target is based on a multiple of 32 times 2018 earnings per share at $5.46. However, their sum-of-parts analysis values BABA at $200. JP Morgan reinstated its coverage of BABA with a $190 price target yesterday.
And remember that on the technical side, we have a very clear breakout from the $120 level which took 3 years to finally breakout above it's IPO high of $120. We were hoping to get this one back on a pullback of the potential gap-fill. But that gap has been held for 20 days now on increased volume, which indicates accumulation. Take a look below:
We'll update members via a live SMS alert as soon as we take that trade.
June 8 UPDATED - Members Trade Alert
BotTrigger Trade Alert: $BABA now up +52% from buy alert 1 and +27% from buy alert 2. Today we're receiving a major bonus as BABA rises +16% on the announcement that forward revenue guidance is much higher than expected at 45%-49%. Surprisingly, this strength in earnings has less to do with e-commerce/cloud and more to do with strength from Alibaba's advertising platform. In an economic slowdown, companies cannot cut the ad budget as it represents their only hope for growth. We saw the same thing with Facebook and Google. In response to BABA's big move, we're booking profits by selling a 15% allocation of BABA and raising the momentum sell point to $135. Good work. Peak distance traveled above the 20 day moving average & this blue line will need to catch up. BABA will likely rest & back fill before moving higher. Expect a retracement.
May 26 UPDATED - Members Trade Alert
BotTrigger Trade Alert: $BABA sold 50% of our allocated position @ $124.04. At the close of the week here BABA has a filled green bar on the weekly chart. This filled green bar is a reversal bar where although BABA is closing higher than the week prior, it's closing lower than the open of this particular week. This suggests momentum is stalling around this area. What's more, we're also getting a bearish crossover on the stochastics indicator on the weekly time frame. This is the 4th time in BABA's entire history that Stochastics has been this high and now take notice what has happened every time thus far without when Stochastics gets up this high and then starts a bearish crossover (when the red line crosses under the blue line). Now the only reason why we're selling half here is because of the following: 1) there is no hard sell signal on BABA just yet 2) BABA is still very bullish in the primary term uptrend as it has just broke out from a 2.6 year long base from it's old IPO high of $120. That's bullish and indicates the trend wants to continue towards the upside. We're going to trade back into BABA if we indeed get a pullback and quality bounce off that pullback. Selling half here also runs the risk that BABA may run off without us here but that's why we're only selling half. And if that is the case and we get a strong breakout higher, we'll simply add back in on the next relative pullback within that new trading range. Either way, this is a prudent area to reduce for now.
May 15 - Updated Post
BotTrigger Trade Update: $BABA ,continues to work higher from our 2nd buy point now with almost a 30% gain to date. Alibaba is currently above it's all time IPO high of $120. Today marks the (start of) 2nd consecutive week trading above that $120 level. This is ultra bullish. Remember this is a stock that ipo'd back in September of 2014, topped out at around $120 and then made it's way to a low of $57.20. Since that bottom the stock has came all the way back up round-trip and is now above the $120 level 2.5 years later. Up here at this +$120 level there are no losers who own the stock. The stock has fulfilled the exchange for all those sell orders for anyone that wanted out at this point as buying demand took over the picture here. We are now in that sweet spot where $BABA can go much much higher. This is the same sweet spot we saw on Boeing, TSLA, AMZN any many more that we've issued buy alerts for. Think of this area as where the air gets a lot thinner in atmospheric pressure for which a rocket can push upwards through. Inversely, when a stock is bottoming (like when a rocket is just starting to launch) the air is really thick or in a stocks case, there is still a very heavy supply of losing traders who want their money back and are "opportunity sellers." Those sellers are akin to thick ground air for a rockets launch. It's turbulent getting off the ground from a bottom. The higher the rocket goes, the air begins to thin out. Now that does't mean that all time new highs = higher prices just automatically come thereafter. NO. It's just a dynamic that helps further tilt things more bullishly and becomes another piece/part of evidence in holistic analysis.
We made a firm argument back in the early fall of 2016 why BABA was en route to higher prices due to that large Double-Bottom pattern that the stock had cultivated and the stock has since performed to forecast. The revisit of the $120 level did indeed happen and now we're above that key area. Earnings are up this Wednesday and it's entirely possible that earnings can cause a pullback here, or break the stock out even higher. If the stock does drop on earnings...we'll be looking to increase our allocation size on BABA if the stock gets close to the $110 level. Pullbacks here are a buying opportunity. If the stock however breaks out, then we'll look to add more BABA size on the next relative pullback. We'll start to reduce our size on BABA once we see evidence that the intermediate term trend is starting to top out. For now, we still have strong bull signals that suggest there is still higher to go.
Updated Post: April 10 - 2nd Buy Alert @ $111.36
BotTrigger Trade Alert: $BABA bought/added @ $111.36 bringing our entire allocation to 8% total on Alibaba. We've been discussing this one for a while here that this stock has long since bottomed. The pattern that has cultivated here is a giant, double-bottom "W" formation over the last year and half. The pullback cycles here have been a retest of prior breakout zones....each time making a higher-low. What's more, we have now have BABA trading above last years high of $109.87. Much like TSLA, this is a shift in trading behavior & usually sets the onset for higher to follow. Take notice on this weekly chart how BABA is peaking it's head out of this range...this usually means that a stock is on it's way to retest it's all time high...which in this case is $120. Long term trend is strong on BABA and this can easily see much higher than $120. $120 is just the near-term to intermediate-term target. Baba is another stock we will be looking to add either some kind of call-spread or deep in the money call allocation when we get another pullback. For now we're simply adding more of the common to our existing long position.
November 11 - 1st Buy Alert @ $92.99
BotTrigger Trade Alert: $BABA bought @ $92.99 a starting allocation due to a giant double-bottom "W" formation that has cultivated over 2 years worth of data showing that BABA has retested the lows, rejected those lows and has since broken out from a this W bottom formation. Before breaking out from this double-bottom, W formation, BABA sported a consolidation bull flag that was also considered a retest....then broke out higher, rallied and then pulled significantly back down to retest the W Breakout zone. So this is the area that BABA is retesting and the probability that this holds & bounces is extremely high largely due to the prior pattern that has since cultivated. We're going to make a stand here and start our first long position on this name due to what has since transpired. We may get some temporary downside or consolidation in the coming weeks but any further draw-down from here will all look very much like a buying opportunity on this pattern. Be patient here and give this time to further setup for higher