To The Moon

I am BEARISH on $Alibaba(BABA)$ at these levels.

Here's a look at the daily chart:

The stock rejected below its 10DMA and 20DMA, which leads me to think it would gravitate towards its longer term MAs, namely the 100DMA at 82.86 and the 50DMA at 77.86. However, the stock likes round numbers as psychological support levels (i.e. 75/80/85/90/95) and I think a downside move to 80 is likely before any move higher. 

Moreover, China's reopening is likely to throw a spanner into the works. The country projects 250 million new COVID cases in December, which is likely to serve as a headwind to the Chinese economy in the short term. However, China's efforts to open up the economy should serve to stimulate the economy in the longer term and ease global supply chain issues.

Here's a look at the Bollinger Bands of the stock:

The stock tested and closed below the middle BB, which leads me to think that the stock will make a downside move towards the lower BB. Contracting BBs suggest a strong directional move is coming. One possibility is that the stock will test the lower BB before making a strong move to the upside. 

So, how do we trade this? You can get PUTS (83P or 82P) expiring 3-4 weeks later. Once we touch 80, then I suggest trying a long call position at that level (80C or 81C) expiring 3-4 weeks later from that level back towards 85s and higher. Good luck everyone!

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@TigerWire  @TigerStars  @CaptainTiger  

$SPDR S&P 500 ETF Trust(SPY)$ $CSI China Internet ETF(KWEB)$  $JD.com(JD)$ $Pinduoduo Inc.(PDD)$ $Baidu(BIDU)$