Chinese stocks followed through on Wednesday, setting the stage for several more days of gains, as many of the stocks we are trading are breaking above resistance today. This post is a continuation from the review we did this morning, in our pre-market post.
Summary
China stocks from the retail group like JD.com (JD) which rallied 15%. Pinduoduo (PDD) gained 7.7%, adding to Tuesday’s rally. Both stocks added to solid gains to start the New Year.
China EV makers BYD (BYDDF), Li Auto (LI), XPing (XPEV), and Nio (NIO) surged on Wednesday.
Macau-centric casinos Wynn Resorts (WYNN) and Las Vegas Sands (LVS) also catapulted on easing Covid restrictions.
E-commerce stock Baozun (BZUN) tacked on a 16.67% gain today, while internet ETFs CWEB and KWEB broke above resistance. Online gaming also found buyers with Netease (NTES) surging (+8.0%),
Chinese Stocks – Catalyst – BABA Ant Approval
Alibaba (BABA) stock gapped up on Wednesday, adding (+12.98%) to an already impressive move that started on Tuesday (+4.54%). Most analysts attribute the outsized move to Beijing’s approval to a massive capital increase. Jack Ma’s Ant Financial Group can now raise $1.5 billion for the tech giant’s consumer finance unit. Alibaba owns 33% of Ant.
Alibaba (BABA) stock finally regained its 200-day moving average on Wednesday. Price action surged to the highest level since the August 26 pivot and 50d moving average resistance at $104.85.
Volume was above average, adding to the impressive performance.
RS line is heading higher (78).
Alibaba Trading at a Discount
Fundamental catalysts abound as well, with Alibaba trading at a discount to sales, a discount to EBITDA, a discount to free cash flow (FCF), and a discount to operatings earnings.
Free cash flow is estimated to grow 45.50% in 2023.
Alibaba weekly chart shows a clear trend break beginning this week.
Join us today in the trading room for our LIVE broadcast during market hours, as we navigate the current environment. Watch, listen, and trade from 9:20 AM to 4:15 PM Monday through Friday.
Happy Trading,
Vinny
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