-- Alibaba stock has started off 2023 on the right foot for the longs, with the shares up more than 15% so far. Here's how it can continue higher. --
By Bret Kenwell, TheStreet.com
Shares of Alibaba (BABA) are starting the year off higher, already up more than 15% so far.
The stock jumped 4.4% on Jan. 3, the first trading day of the year. Today, the shares are up more than 10% and hitting their highest level since August.
It's not the only Chinese stock enjoying the day. JD.com (JD) and Nio (NIO) are both up by double-digit percentages, while the iShares China Large-Cap ETF (FXI) is up almost 6%.
Alibaba's gains come as "its fintech spinoff Ant Group has secured regulatory approval to raise cash for its consumer lending arm."
Given how poorly Alibaba stock has done over the past few years, could there be more upside? Let's look at the chart.
Trading Alibaba Stock
Daily chart of Alibaba stock
Chart courtesy of TrendSpider.com
Alibaba stock fell 26% in 2022 and suffered a peak-to-trough decline of more than 80%. But it's been trading much better since bottoming in October.
The bulls should be happy with today's decisive action, as Alibaba is breaking out over a number of key levels. They include the $94 resistance level, the $100 mark and the 61.8% retracement.
Not to mention: The stock is now back above all its major daily moving averages.
If Alibaba stock can stay above $100, that opens the door to the 78.6% retracement near $111, the gap-fill near $121 and finally, the $125 area, which is a multiquarter high.
There are some other areas of significance near $120 to $125 as well.
Monthly chart of Alibaba stock
Chart courtesy of TrendSpider.com
On the monthly chart, the $120 to $125 area also shows the 23.6% retracement of the total range, as well as the declining 21-month moving average. If we see a rally to this area, traders would be wise to consider taking some profits.
The way Alibaba stock bounced out of that key $50 area should highlight why it's critical for investors to look at multiple time frames, as the shares have rallied significantly off the low.
Should Alibaba get back to $120, it will have more than doubled from the low.
If Alibaba pushes higher, the 2022 high could be in play at $138.70, but for now, let's just go one step at a time.
On the downside, a move below $100 puts $94 back in play, along with its short-term moving averages.
The bulls do not want to see Alibaba stock break below its 200-day moving average, which would make it vulnerable to further declines.
From TheStreet.com