Skip to main content

Alibaba Stock Could Pull Back Amid 'AI Price War'

Let's look at the charts to see the path forward.
Comments

Reports Tuesday morning say that Alibaba Group  (BABA)  is slashing the prices of their cloud services. It also appears that Baidu  (BIDU)  is following suit and the implication is an AI price war of sorts (did AI forecast that?).

Let's check out the charts.

In this daily bar chart of BABA, below, I can see that the shares have surged the past four weeks. BABA rallied above the 50-day and the 200-day moving averages but only the slope of the 50-day line turned positive. 

The trading volume jumped higher in recent days. The On-Balance-Volume (OBV) line shows a rising trend from January. The Moving Average Convergence Divergence (MACD) oscillator is in a bullish alignment above the zero line.

BABAdaily

In the weekly Japanese candlestick chart of BABA, below, I see a less-than-constructive picture. The recent price gains on the daily bar chart above look like just a bounce in a longer-term decline on this chart. The slope of the 40-week moving average line is still negative. 

The weekly OBV line shows limited strength in a longer-term decline. The MACD oscillator is testing the zero line.

BABAweeklycandle

In this daily Point and Figure chart of BABA, below, I can see an upside price target in the $106 area but prices are currently in a down column of "0's" so we may see this chart turn bearish soon.

BABAdailypnf

In this weekly Point and Figure chart of BABA, below, I can see an upside price target in the $132 area but I also see plenty of room for a pullback/decline.

BABAweeklypnf

Bottom-line strategy: BABA looks poised for a pullback after recent gains. How long and how deep prices decline is up for debate.

Employees of TheStreet are prohibited from trading individual securities.