3/25/2018 Short Post on BABA

Fun Fact #10

Did you know that the S&P500 actually consists of 505 stocks? It still has 500 companies though. I guess they could change the name to the S&P505, but that wouldn’t sound very cool. Also, I like round numbers (and so do you, probably). 


 

Below is a daily chart of Alibaba (BABA) 

BABA daily chart analysis 3_25_2018.PNG

Notice how we’ve been in a nice trading range for the last 8 months. The trading range is from 165 to 205 (about a 25% range).

The demand for the stock (where buyers get aggressive) occurs in the 165-175 range, while the supply for the stock (where sellers get aggressive) occurs in the 195-205 range. You can see that clearly in the chart above. 

Trading Idea: Buy shares of BABA whenever it drops to the 165-175 range, and sell it when it reaches the 190-205 range. Your stop loss would be either a fixed dollar amount below your entry, or set below 165. 

I prefer scaling into my trades so that I don’t put too much pressure on myself to nail the bottom, but I generally do not scale out. I prefer moving up my stop loss or getting out of a position completely. 

 

 

 

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