slowly, slowly then suddenly

BABA stock price is making multiple attempts to break above $120 and failing. Now, the stock has firmly moved above 50 day moving average and between 50 & 200 DMA’s. However, 200 DMA is falling, so at some point it could go over 200 DMA.

BABA is not a fundamental story at this point, rather the market’s perception of Chinese government risk is the biggest catalyst. That’s measured in price action. Of course all this means nothing.

1 Like

The 50DMA is moving up every slowly to $97, & 50 DMA moving down to $121.62. My hunch is if it breaks above 200 DMA hello $140, and on the downside $80 has support.

The stock is volatile and currently options are pricing in lower volatility than what is realized recently, meaning, you may want to buy options and if you like, sell out of the money options. The stock moves a bit, so be careful.

I am still rotating my covered calls and so far a good trade.

So far looks like clean break with volume… If it stays above 200 DMA hello $140

Chinese Emperor xi strikes, Chinese internet firms were dealt with new set of fines yesterday for disclosure violations. BABA dropped 9.4% or $11.33 (no it is not the mistake, I noticed this phenomenon with Chinese stocks) on 50% higher volume (compared to the last 10 day average). Sort of resets the clock. My $115 C may again expire worthless… sigh.

Over the weekend, China’s State Administration for Market Regulation hit Alibaba (BABA) subsidiaries with a fine equivalent to $373,000 that was related to failing to file reports on five deals.

https://seekingalpha.com/news/3855820-why-did-alibaba-shares…

A $373K file results in a market cap decline of $30B. That seems par for the course for Mr. Market.

Manlobbi has an update on BABA on his namesake board. Well worth a read.

3 Likes

It is not the size of the fine, but Chinese authorities sending a message. When the emperor sends a message, he can be very very gentle. I wanted to get rid of my position, with covered call I have over 25% gain. My fear is I will end up doing a round trip. You need to get out when you had your gains.

1 Like

It is not the size of the fine, but Chinese authorities sending a message. When the emperor sends a message, he can be very very gentle.

It was a slap on the wrist with the message: ‘report merger deals as required by law’, and, ‘you are not above the law’. Reasonable message to convey, no big deal.

Covid spreading again in China is also part of the negative market reaction today. You’d think the emperor would be focussed on getting the population vaccinated with a good vaccine …

You’d think the emperor would be focussed on getting the population vaccinated with a good vaccine …

If I am emperor, who is worried about retaining my power, any rebellion, resistance however miniscule has to be dealt swiftly and severely. We can care about populace later, especially when you have 1.4 billion, what if few thousand die? A collateral damage?

PS: For those who get riled by political correctness, Chinese regime’s past behavior is what I have described above. Still not convinced, the photo of a lone individual with a grocery bag in his hand in front of a convoy of marching tanks, tanks that were marching against their own citizens, is telling me you better freaking believe it.

Rnam, I remembered a Buffett quote: The biggest money are made based on qualitative judgments.

Quantitatively there’s no doubt baba is cheap, especially after you count its $40b cash on balance sheet and its 1/3 state in Ant Financial.

The qualitative judgment is whether CCP is going to regulate Baba to death. Rationally it doesn’t make sense for CCP: tens of thousands of high tech young workers have lost their jobs due to the policy error. But nobody can tell how long Winnie the Pooh will stay in power. There’s a lot of speculations that Li Keqiang is increasing his influence at the cost of Xi. But impo, it’s very hard for anyone to reverse China’s progress and direction towards capitalism over the long term.

1 Like

Rationally it doesn’t make sense for CCP

In politics, there is no such thing as right or wrong, you do something towards an objective. Either you achieve it or not.

So trying to view an act is rational or irrational from our shoes is not the right way of looking at things.

It was a slap on the wrist with the message: ‘report merger deals as required by law’, and, ‘you are not above the law’. Reasonable message to convey, no big deal.

Today another news or compliance is probing data theft. These are not just some random coincidence, they are coordinated acts of the state.