First things first, a heartfelt shout out to all of those currently serving in the armed forces, all of those who have served and specifically to those close to us who have sacrificed in defense of our freedom. Both CC and my Dad are Army veterans, and while they served in the 60s, we view them very much as part of the Greatest Generation.
In case you missed it, it’s Singles Day in China for online retailers, their version of Black Friday / Cyber Monday and anything else you want to throw in there. Alibaba (BABA) is the one company that US investors will likely always associate with the retail holiday, which they had never even heard of before BABA’s ipo road show last summer. Here is Bloomberg’s headline: Alibaba Smashes Singles’ Day Sales Record in Half the Time:
It only took Jack Ma half the time Wednesday to sell the same amount of stuff he did a year ago with his online channels. Transactions through Alibaba Group Holding Ltd. during the annual Singles’ Day shopping event passed 57.1 billion yuan ($9 billion) before midday, eclipsing last year’s record with another 12 hours still to go. By 6:45 p.m. Beijing time, they totaled more than 74 billion yuan. The top-selling items included baby-related and nutritional products, Nike sneakers and Levi’s jeans, the company said.
Oh, what a difference a year makes for the stock and its Singles Day sales. From the Sept 18th IPO at $68, BABA holders had just one date on their mind, 11/11/14. After a few weeks of an ipo hangover, the stock rallied 45% from Oct 14th to Nov 14th, the date it put in its top:
BABA started 2015 with an earnings report that showed decelerating growth. That accelerated the stock’s slide from the Nov highs and bottomed out in late September in what amounted to a 52% peak to trough decline. Since late September when negative sentiment hit a fever pitch (with the backdrop of their 1.4 billion share ipo lock up expiration, our lengthy coverage here) with Barron’s suggesting the stock could drop another 50% from the high $50s, the stock has rallied 40% and is now hovering above the only real long term technical level of any significance, its August breakdown level of $80:
I guess there is one other important level to keep an eye on, and that’s the downtrend that’s been in place since the Nov 2014 highs, which the stock recently broke above:
With $90 possible technical resistance and sentiment reversing into an event, the stock could set up at the very least for short back to trend near $70, or consolidate between important support at $80 and resistance at $90. Short dated options prices remain elevated from their early Summer levels, which could set up for short premium defined risk options trades that define a range:
Stay tuned for trade ideas.