BABA - Great Rally - Can it overcome $140? $165?It's a great day! I hope you're all having a wonderful trading day!
Quick update on BABA - in the video I discuss the Trend-Based Fibonacci Extension tool which is built right into Tradingview and how fibonacci tools are some of the ONLY forward looking projection indicators out there. Ichimoku Cloud is another (we'll save that complex beast for another day).
We've had a serious rally on BABA (and really the whole Chinese stock market in general) recently and while I think that trend can continue, we should keep seasonality in check and realize that after big rallies, there are always pullbacks awaiting. This is how the market is designed to take your money. Here's the scenario:
You see BABA trading at $70 and think it'll go lower - if you're a holder, maybe you sell. If you are looking to buy, you probably want to buy it lower.
BABA starts to rally significantly, exhibiting a 67% rally over the course of approximately 10 months. You start to get anxious because you missed such a large move.
You decide you want to buy because the last week alone has seen a significant move, but you didn't do a bunch of research to realize that BABA is about to potentially pull back, so you buy.
BABA starts a pullback. Let's assume you buy today at $110 and it pulls back to $98 - a decrease of ~11% - your hypothetical $11,000 investment is now only worth $9,800 - so you decide to be "responsible" and cut your losses to prevent further losses, when in reality, that's the best time to actually buy in.
What's my point? If you're only just now looking at BABA, you're probably feeling FOMO right now. Fear Of Missing Out. There's a reason Berkshire has loads of cash in their holdings. They're waiting for pullbacks in the markets to buy. You should, too. If you miss BABA, there will always be another opportunity. There's hundreds of new opportunities in the market every single day - you just have to do the grunt work and find it.
