BABA gains $2.76 (1.58%) after posting strong earnings
Alibaba Group Holding Limited (BABA) Technical Analysis Report for May 15, 2019 | by Techniquant Editorial Team
Moving higher for the 2nd day in a row, BABA ended Wednesday at 177.60 gaining $2.76 (1.58%) on high volume, outperforming the S&P 500 (0.58%) following today's earnings report. Trading up to $3.72 lower after the open, the share managed to reverse during the session as bulls took control ending the day above its opening price. Ending the day with an indecisive close, neither buyers nor sellers were able to gain control during the session.
Daily Candlestick Chart (BABA as at May 15, 2019):
BABA reported earnings of $1.28 per share before today's market open. With analysts having expected an EPS of $1.04, Alibaba Group Holding Limited topped market expectations by 23.1%. The company's last earnings report was released on Jan. 30, 2019, when Alibaba Group Holding Limited reported earnings of $1.77 per share surpassing market expectations by 7.9%.
Wednesday's trading range has been $6.90 (3.9%), that's far above the last trading month's daily average range of $4.38. Weekly volatility is also higher, being slightly above the market's average weekly trading range. The longer-term, monthly volatility is currently notably higher than usual for BABA.
Two candlestick patterns are matching today's price action, the Bullish High-Wave Candle and the Bullish Spinning Top which are both known as bullish patterns. The last time a Bullish Spinning Top showed up on Monday, BABA gained 2.84% on the following trading day.
Unable to break through the key technical resistance level at 178.01 (R1), the market closed below it after spiking up to 180.24 earlier during the day. The failure to close above the resistance could increase that levels importance going forward.
Although still in a long-term uptrend, the short and medium-term trends both turned bearish already.
Buying might accelerate should prices move above the close-by swing high at 180.79 where further buy stops could get triggered.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the Stock Earning Report based market condition "Trading Day post strong Earnings Report" stand out. While it is usually interpreted as neutral, it has actually shown to be bullish for Alibaba Group. Out of 13 times, BABA closed higher 69.23% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 69.23% with an average market move of 1.07%.