BABA Update

BABA as best as I can tell is slated to report May 7th (Thursday) before the open, watch those option premiums in front of earnings.

As for the actual trade set-up as posted yesterday, Trade Set-Up: BABA today BABA did EVERYTHING we expected in the forward looking "trade Set-Up" post.

I mentioned earlier today (as I would anytime), that a "V" reversal is not common and to look for not only a capitulation/stop run event which already occurred, but a reversal process in the form of a "U" shape of a "W".

To me it looks like BABA is going to put in a "W" base, but I want to be careful not to add to this one until I'm sure that the second low is in place with accumulation and there's a chance of a stop run at the second low (although much smaller) as today's intraday lows act as near term support. This is EXACTLY the scenario we predicted last Thursday for the broad market, you may recall I did not close my UVXY long position on the initial losses as I expected the second part of the low to make a deeper head fake low and this is when and where I closed UVXY long and 30 minutes later opened VXX puts as posted again last night in the Daily Wrap. For an equity long position, it doesn't make that much difference in my view.


Here are the very basics of the situation...

 The strongest chart/underlying trade of the bunch, BABA 15 min relative positive to a leading positive. Note this morning's break below the Psychological stop-level of $80. After that was hit and volume confirmed, the next thing we looked for was a flameout which came and then a reversal process that is proportional to today's break of support at $80.10 and the psych level of $80 (whole numbers draw people's attention and they place stops/orders at whole numbers, why do you think everything in a store is some version of $.99 ?).

The most probable base from this point would of course be a "W" base which we are close to moving toward fulfilling.

 5 min also showing a positive at this morning's lows.

The shorter term 3C charts below are showing more intraday movement...

While this divergence sending prices lower from intraday recovery highs off this morning's lows, ,ay look to be an impressive divergence, remember this is only a 2 min. timeframe. This is intraday movement to move price, not accumulation or distribution. And at this point it looks as if it is moving it lower to make a "W"-shaped base to bounce off.

If we get that, if the market averages look better and we have continued positives in BABA, I would look at a BABA equity long, unless you know what you are doing with options as the premiums increase before earnings and even if you are right you can lose money.