BABA - Armageddon in chinese stocks (REPOST)
Repost of original idea from 15.3.2020, unfortunately it got deleted:
Alibaba investors mood hit a new low at today’s market opening, the stock price also.... This article is intended to help investors better understand the recent movements. NYSE:BABA
Currently Alibaba is reaching price levels most traders never thought to be possible. The stock has fallen tremendously and the negative reports in the newspapers are not decreasing. The threats from the SEC to Chinese companies, renewed Covid-19 outbreaks in China or increasing regulations from the Chinese state. There doesn't seem to be an end in sight....
In our last article "BABA - The shelling continues" we clearly warned of a sharp decline of the stock. This decline has now happened and we are down almost -24% since the last published article. Therefore, our expectations for wave 3 have even been exceeded, a very painful wave 3 has now possibly come to an end. However the readers of this article should be warned, the correction has probably not reached its final end yet!
Technical explanation of the elliot wave structure:
The red wave (iii) reached $73 a few hours ago and clearly exceeded the minimum target of this movement. From now on, further sell-offs are possible, but we estimate that Alibaba will start a recovery in the red wave (iv) in the coming days. A recovery into the range of 87$-95$ is possible and does not change our expectation of new lows.
According to our estimations, Alibaba is still missing a final downward impulse that should drive the price towards $70. Its possible that alibaba will touch the major support at the 0.786 retracement at 68.33$, this line acts as a very big support. This last wave (v) is important for the completion of our elliot wave count. If this wave (v) is completed, Alibaba has a great chance to reach a significant turning point. Our long-term view as Mendenmein Capital is still that alibaba is in the last steps of completing a large cycle wave (II). From these absolute lows, we will start a long-term bull market that should bring the stock back to the $200 to $300 range. In the next few years, even a breakout to new all-time highs is very likely.
Alibaba investors mood hit a new low at today’s market opening, the stock price also.... This article is intended to help investors better understand the recent movements. NYSE:BABA
Currently Alibaba is reaching price levels most traders never thought to be possible. The stock has fallen tremendously and the negative reports in the newspapers are not decreasing. The threats from the SEC to Chinese companies, renewed Covid-19 outbreaks in China or increasing regulations from the Chinese state. There doesn't seem to be an end in sight....
In our last article "BABA - The shelling continues" we clearly warned of a sharp decline of the stock. This decline has now happened and we are down almost -24% since the last published article. Therefore, our expectations for wave 3 have even been exceeded, a very painful wave 3 has now possibly come to an end. However the readers of this article should be warned, the correction has probably not reached its final end yet!
Technical explanation of the elliot wave structure:
The red wave (iii) reached $73 a few hours ago and clearly exceeded the minimum target of this movement. From now on, further sell-offs are possible, but we estimate that Alibaba will start a recovery in the red wave (iv) in the coming days. A recovery into the range of 87$-95$ is possible and does not change our expectation of new lows.
According to our estimations, Alibaba is still missing a final downward impulse that should drive the price towards $70. Its possible that alibaba will touch the major support at the 0.786 retracement at 68.33$, this line acts as a very big support. This last wave (v) is important for the completion of our elliot wave count. If this wave (v) is completed, Alibaba has a great chance to reach a significant turning point. Our long-term view as Mendenmein Capital is still that alibaba is in the last steps of completing a large cycle wave (II). From these absolute lows, we will start a long-term bull market that should bring the stock back to the $200 to $300 range. In the next few years, even a breakout to new all-time highs is very likely.
If you should have any questions regarding our analysis or elliot wave counts feel free to contact us.
In the past, the Chinese government often targeted its own companies through regulatory or prosecutorial measures. So it is very surprising to hear positive news from the Chinese government about its companies.
According to the Xinhua news agency, the Chinese government is committed to stabilize the stock market.
In addition, it is in the government's interest that Chinese companies are also listed on foreign stock exchanges. This surprising support for its companies have resulted in a very strong surge across the board.
In the past, there have been repeated fears about a delisting of Alibaba. The following statement of the Chinese government has eased these fears for the moment.
Technical View
In our analysis from 15.3.2022, we stated that wave (iii) has ended and that we will see a recovery to the range of 87$-95$ in wave (iv).
This has now happened exactly as predicted just one day later in a strong 20% gain for alibaba.
We assume that the stock will be in wave (iv) for the next days or weeks. It is possible that wave (iv) can extend to the 0.5 retracement at 101.34$. We do not intend to open a short position.
Regardless of the positive news we still anticipate that the stock will begin its final sell-off to the 0.786 retracement at $68.33 in wave (v).