Alibaba Group Holding (NYSE:BABA) Stock Is Due For A Pullback
Shares of Hangzhou, China-based Alibaba (NYSE:BABA) have had a phenomenal run this year. Alibaba stock price is up by 92.8% year-to-date, making the 8.5% gains of the S&P 500 (INDEX:SPAL) look puny in comparison. Alibaba stock received a solid boost from the recently announced Q1 2018 earnings, which saw the company register a 56% year-over-year top line growth and an even better 58% growth in bottom line. As we had covered in our recent Alibaba coverage, the company crushed Wall Street consensus by a wide margin. Investors haven't stopped cheering ever since. Alibaba stock price is up by over 6% in the three trading sessions since the earnings announcement. Given the kind of run it has had, can Alibaba stock maintain the post-earnings momentum? Well, from a purely technical perspective, the stock might be due for a short-term pullback, and here is why.
The recent run, fuelled by the strong earnings report, has taken Alibaba stock price significantly above the key moving averages. While the rally has been a positive for investors, this has also exposed the stock to the risk of a pullback, with the first meaningful support for the stock, its 20-day simple moving average (SMA) at $156.9, lying 7.3% below the last closing price. The downside risk is also heightened by the fact that Alibaba stock price is now trading in the overbought territory, as per the Relative Strength Index (RSI), which is a popular momentum indicator. The RSI reading for Alibaba stock is currently at 71.08, well clear of the threshold of 70 which is used to identify overbought stocks. In addition, Alibaba stock price is also flirting with the upper Bollinger band, which currently reads 170.63, strengthening the case for a near-term correction in the stock price.
Ambarella, Inc. (NASDAQ:AMBA) Could Be Headed Lower
Like Alibaba, Ambarella (NASDAQ:AMBA) stock looks poised for a down move. However, unlike Alibaba, Ambarella has had a forgettable year. Ambarella stock is down by 8.76% for the year, underperforming the S&P 500 by 17.3%, which summarizes the misery Ambarella stock investors have been through. And well, if the Ambarella stock technical chart is anything to by, the pain isn't going to end anytime soon. The bears aren't loosening their grip at this counter anytime soon.
Shares of Ambarella are trading below the key moving averages, which implies that now isn't the best time to look for entry into the stock. With the 20-day, 50-day and 100-day SMAs currently lying at the $50-$53 levels, Ambarella stock faces strong resistance, which will take something special to break through. In addition to the strong resistance zone, Ambarella stock is also faced by another negative on the technical chart. The Moving Average Convergence Divergence (MACD) indicator, a popular tool used by market observers flashed a bearish MACD crossover in the last trading session. The MACD line dropped below the signal line, implying that Ambarella stock price might well continue along its downward path over the next few trading sessions.
Bulls Are Cheering On Intel Corporation (NASDAQ:INTC) Stock
Our third technical trade for the day involves Chipzilla Intel Corporation(NASDAQ:INTC). Intel stock has had a fairly poor year, falling 3.72% in a year which has seen the broader market rise. However, based on readings from two key momentum indicators, shares of the CPU giant might well be near the bottom. The Relative Strength Index (RSI) a popular tool among chartists, currently flashes a reading of 29.9, indicating that Intel stock has now fallen into oversold territory. To put it another way, a sub-30 RSI reading is usually considered to be a case of an oversold stock, implying that a bounce might not be too far.
The case for an up move in Intel stock price, at least in the short term, is also supported by the Bollinger Bands indicator, which is another popular momentum indicator. Intel stock price currently sits in close proximity to the lower band, which implies that the stock is due for a move to higher ground. In light of these signals from the Intel stock technical chart, Intel stock might have well printed a bottom and could move higher in the near-term.
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