WELCOME

Welcome and thank you for visiting!

The charts, graphs and comments in my Trading Blog represent my technical analysis and observations of a variety of world markets...
* Major World Market Indices * Futures Markets * U.S. Sectors and ETFs * Commodities * U.S. Bonds * Forex

N.B.
* The content in my articles is time-sensitive. Each one shows the date and time (New York ET) that I publish them. By the time you read them, market conditions may be quite different than that which is described in my posts, and upon which my analyses are based at that time.
* My posts are also re-published by several other websites and I have no control as to when their editors do so, or for the accuracy in their editing and reproduction of my content.
* In answer to this often-asked question, please be advised that I do not post articles from other writers on my site.
* From time to time, I will add updated market information and charts to some of my articles, so it's worth checking back here occasionally for the latest analyses.

DISCLAIMER: All the information contained within my posts are my opinions only and none of it may be construed as financial or trading advice...please read my full Disclaimer at this link.

Dots

* If the dots don't connect, gather more dots until they do...or, just follow the $$$...

Paris Cafe

Paris Cafe

ECONOMIC EVENTS

 UPCOMING (MAJOR) U.S. ECONOMIC EVENTS...

* Wed. May 25 @ 2:00 pm ET - FOMC Meeting Minutes
* Wed. June 1 @ 2:00 pm ET - Beige Book Report
* Fri. June 3 @ 8:30 am ET - Employment Data
* Wed. June 15 @ 2:00 pm ET - FOMC Rate Announcement + Forecasts and @ 2:30 pm ET - Fed Chair Press Conference
* Wed. July 27 @ 2:00 pm ET - FOMC Rate Announcement + Forecasts and @ 2:30 pm ET - Fed Chair Press Conference
* Wed. Sept. 21 @ 2:00 pm ET - FOMC Rate Announcement + Forecasts and @ 2:30 pm ET - Fed Chair Press Conference
* Wed. Nov. 2 @ 2:00 pm ET - FOMC Rate Announcement + Forecasts and @ 2:30 pm ET - Fed Chair Press Conference
* Wed. Dec. 14 @ 2:00 pm ET - FOMC Rate Announcement + Forecasts and @ 2:30 pm ET - Fed Chair Press Conference

*** CLICK HERE for link to Economic Calendars for all upcoming events.

Monday, February 07, 2022

Alibaba Ensconced In Chaos Zone

Alibaba (BABA) has plunged into what I call a 'Chaos Zone,' as shown on the following monthly chart.

As you can see, it's nearing its IPO price of 92.70 in September 2014, after reaching a high of 319.32 in October 2020.

The following article mentions a scenario that may occur.

Before we see that happen, if at all, we may see BABA drop somewhat further on this rumour, then reverse sharply and possibly retest the 160.00 level, or thereabouts. I'd look for a large volume spike, together with an extreme ATR print (based on a value of one period, as shown), to confirm such a V-bottom reversal had occurred at a lower price level.

It may be that, during such a reversal to the upside, SoftBank begins to dump its shares, in which case, we'd likely see volatile price moves in both directions...possibly within the upper half of the 'Chaos Zone,' or around the 120.00 level. Price may spin around 120.00 ('thread the needle') before it moves erratically higher toward 160.00.

Failure of BABA to move and hold above 160.00, on increasing volumes, may signal much further weakness ahead, with price, ultimately, retesting 80.00, or lower.

So, there is a lot of room for wild price swings to occur within BABA's 'Chaos Zone,' along with the release of wild rumours about SoftBank, or something/someone else.

Buyer beware!

P.S. SoftBank's own stock (SFTBY) has dropped considerably from its 2021 high of 50.00 and is mired in its own 'Chaos Zone,' as shown on the following daily chart.

It's in solid downtrend and is still under the bearish influences of a moving average Death Cross that formed in mid-2021.

A drop and hold below 20.00 could force a retest at 17.5, or lower at 15.00

A drop and hold below 15.00 could prompt its sale of some or most/all of its stake in BABA, as described above...or, even as soon as a break and hold below 20.00 on increasing volumes.

The monthly chart of SFTBY shows a macro view of price action, the 'Chaos Zone,' and other major support and resistance levels.

Watch for any extreme spikes in the volume and the ATR indicator (shown with an input value of one period) to, potentially, verify a trend reversal after any further plunge lower in price on this timeframe...particularly if it breaks and holds below 20.00 with force.

The following daily ratio chart of SFTBY:BABA shows that there has been a whipsaw struggle for relative strength between the two since mid-2018.

This ratio has been trading in its own 'Chaos Zone' since the beginning of 2021.

A rapid plunge on this ratio could spell big trouble for both stocks. A drop and hold below 0.150 could be catastrophic for both, so keep an eye on this.

In any event, they're both weak and mired in their own 'Chaos Zones.'

Expect volatile churn to continue until we see clear breakouts or breakdowns and holds, with conviction...on BABA, SFTBY, and SFTBY:BABA.