To The Moon

I am leaning bearish on $Alibaba(09988)$ at these levels. As you can see, the stock has been trading in a broadening wedge setup for the past few weeks. This is also coupled with the massive inverse head and shoulders formation that has played out on the daily chart, with a head at about 60 and the inverse shoulders at about 80-90. The stock is nearing the upper trendline of the broadening wedge pattern which leads me to think that a short opportunity is coming. Moreover, the stock is near-term overbought with a 14-day RSI reading above 70. There are several main possibilities here: Possibility 1: We continue to push higher and reject off the upper trendline of the broadening wedge before heading lower to fill some of the gaps that were created on the move to the upside. Possibility 2: We consolidate around this level for a bit and we retest some of the near-term DMAs such as the 5DMA which is currently sitting at 103 before we make a sustained push higher. This could further lead to (a) a breakout above the wedge, with confirmation on a backtest of the upper trendline; or (b) a rejection off the upper trendline. However, based on the trendline, it is likely to reject. I would consider taking PUTS (between 105P and 110P) expiring 1-2 months out to play this part of the trade. I wouldn't be swinging these puts forever though - it is pretty apparent that the stock has genuinely reversed from its capitulation lows, with a strong candle close above the 200DMA a few days ago. So while the short term outlook may start to look bearish again, the long term outlook is bullish. Do keep this in mind when taking this trade. Good luck everyone! If you enjoyed this post, then leave a like and/or a comment on my post and follow me for more of such posts! @TigerWire @TigerStars @CaptainTiger $SPDR S&P 500 ETF Trust(SPY)$ $QQQ(QQQ)$ $CSI China Internet ETF(KWEB)$ $Pinduoduo Inc.(PDD)$ $JD.com(JD)$