Let's chat about alibaba, you know the stock that has been breaking hearts for the past two months. My name is matt and on this channel we talk about stocks and investing. I am by no means a perfect trader, but i really enjoy sharing what i know. So you can hopefully avoid some of the silly mistakes that i've made and trust me.

There have been plenty of them in this video. I will be explaining why i'm personally still bullish on alibaba and i will also be doing a technical breakdown of alibaba stock, where i map out the key price levels that will be in play for the upcoming trading week and now without further ado. Let's get started in late october: shares of alibaba hit their current all-time high, just above 319 dollars. Since then, it's been a pretty brutal eight weeks.

In fact, at the time that i'm filming this video alibaba is trading just above 232, which means that the stock has fallen more than 25 percent, all the problems started in early november, when the ant group ipo was delayed and is a fintech company and alibaba has A one-third ownership stake. This was such a big deal, because ant was set to be the biggest ipo like ever and right before its public debut chinese regulators shut it down. There's a few suspicions of why this happened. First of all, jack ma the founder of alibaba, had made some disparaging comments about the president of china, so it could be a classic tit for tat, and second, the banking sector within china is almost exclusively state owned, so they might have just been trying to stifle Their competition, the decline, then got worse when it was announced that the u.s senate house and president all agreed that chinese stocks should not be on u.s exchanges.

If they don't follow our auditing rules. This would clearly have a negative impact on up to 217 companies, including very popular ones such as alibaba and neo. I've covered this specific issue in more detail in my previous videos, but, to sum all that up, i really don't think it's that big of a deal. First of all, alibaba's auditing has been done by the hong kong branch of pwc since the late 1990s, so there's a very good chance that their financials are already in order and if they're not, they have up to three years to comply, and i really do think That they will because there's just so much money at stake.

Now, let's fast forward to christmas eve, as we were, setting out cookies for santa alibaba stock was sparta kicked off of a cliff. It was announced that the people's bank of china had opened an anti-monopoly investigation on the company. It is suspected that they are looking into alibaba's practice of requiring sellers to exclusively use their platform and not go through competitors in china. Economic development has seriously outpaced regulatory development, so it's pretty common for companies to be operating in some sort of a gray area and then, when regulations catch up, these companies may or may not be on the right side of the law.

In this case, alibaba was on the wrong side of the law, but when you do the math out, this will impact about one percent of alibaba's china segment revenue, which would amount to two to four percent of the china segment profit. Obviously this is a negative development, but i personally believe that the market had a severe overreaction. Nevertheless, alibaba stock has been severely beaten down between the ant group ipo being delayed and the regulation issues in both the u.s and china. Alibaba is straight up not having a good time.

However, i do believe that this represents an interesting opportunity for all of us. Alibaba's fundamentals really haven't changed. It is still a giant technology company with access to one of the largest markets on this planet. As i mentioned, i'm really not too concerned about the regulation issues in the u.s, but it could be argued that once the ant group ipo gets back on track and the fighting between alibaba and the chinese government is over.

Alibaba stock is trading at a big discount relative to where it should be whether it takes weeks or months. I truly believe that there's a lot of upside in alibaba stock, but in the meantime, let's check out the charts alrighty on the screen. Now is alibaba's daily chart, alibaba trades in the ticker b-a-b-a, and the stock is currently sitting just below 233 over the past week month and three months, alibaba is in the red, but over the past year it's in the green. In the end, it did end up underperforming the s p 500 in 2020.

Here is a look at the current technical situation that alibaba is in for those of you who are new to the channel. Here's a quick recap of what's been going on from march up until late october, alibaba had a pretty nice rally in july. It was caught in this bullish pennant. Where was making lower highs and higher lows, and eventually we saw a breakout up to the key psychological level of 300 from there.

There was a sell-off that eventually found support at the start of this bullish, pennant, which was 268. once this support was reaffirmed. We then saw a bounce all the way up to the current all-time high of 319 after this fleeting moment of glee when november rolled around this is when leonidas kicked alibaba into a bottomless pit, and we are now trading at 233 from this high. The stock is now down 26, but at one point it was as low as 33.

This new relative low came on the christmas eve announcement and i do like how it was able to find support at a previous bounce level back in june. Since then, the stock has gone up a little, it was rejected in this gap down region, and now it looks like the bulls and bears are battling it out at the previous resistance of 231. As i mentioned, i do believe that this entire sell-off was a bit of an overreaction, especially this second half, which means for now. I am favoring the bull camp.

Let me quickly open the rsi from a technical perspective. Alibaba is sitting right on top of a level of support and the rsi is very close to the oversold territory. This leads me to believe that the bull camp has a pretty good shot of swinging the stock around to test the next level of resistance, which would come in the region between 240 and 243, and if they're successful there. That would then open up a test of 252..

I do believe that this particular scenario is much more likely and reasonable, but as you'll quickly learn, the stock market isn't always reasonable. If the bear camp somehow pushes alibaba through this support at 231. That would mean that there's a pretty good chance, it would fall all the way back down to 212. moving forward.

When you consider this support and the very low rsi, i would consider 231 to be a pretty good investment, and i would consider 212 to be an excellent investment to get a better idea of what alibaba might do over the next few trading days. Let's see what's going on in the four-hour chart before we jump into this time frame, i wanted to quickly mention that if you enjoy this type of content, it would be truly appreciated if you could drop a like, and if you haven't already don't forget to join The moon gang by hitting the subscribe button all that support, really helps this channel out. Okay back to alibaba, when you include pre and post market trading, you get a slightly different technical structure which includes this trend line that the stock has been battling it out now. For the past two months in late december it looked like there was finally going to be a breakout and a test of 268, but then the negative, anti-monopolistic news came out and alibaba plummeted.

But since then it looks like we're working our way back up to that trend line over the next trading week. I will personally be watching to see how the stock reacts to this price level of 231.. If the bulls win, i will be then looking for a test and breakout of this trendline, which would then set up 252 and if the bears win, i would then be looking to buy more shares of alibaba at 212.. As a quick reminder, i am already invested in alibaba.

I first bought shares at 254 and then again on the first day of this sell-off around 220 and now my cost basis is the mid-230s, which means that i am slightly down on the position now for pretty obvious reasons i don't like being in the red, but In all reality, it doesn't bother me that much i'm planning on holding these shares for years to come, and i think it's just a matter of time before alibaba is able to return all the way up to 320. feel free to. Let me know your thoughts on alibaba stock in a comment below personally, i believe that the current price levels represent a solid investment opportunity. Let me know if you agree or if you think that i'm overlooking something as a quick reminder, if you want four free stocks, make sure to check out the link to the weeble trading platform.

In the description of this video, the company's promotional deal will be ending on january 15th and if you want a fifth free stock, there's also a link to robinhood. If you enjoyed this video, don't forget to drop a like, and if you haven't already don't forget to join the moon gang by hitting the subscribe button. All that support really helps this channel out thanks for watching and until next time. Best of luck in the markets.

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