Chinese stocks are nothing if not volatile, and this continued on Monday with huge rallies in most names. The reason was that China cut the reserve requirement for commercial banks in an effort to try and pump liquidity into the system. This can be taken two ways, and investors chose to see the positives.

China is struggling to contain problems in the banking and property sectors from spreading, and the travails of Evergrande Group have been well documented. Evergrande was due to pay $82.5 million on Monday, but we are still in the dark on whether it met this latest payment or not. Investors may rejoice at the current bounce in Chinese tech stocks, but this has all the makings of yet another dead cat bounce.

BULLISH AND BEARISH CONDITIONS/ POSSIBILITIES :

Take a look at the monthly chart, BABA has broken the huge $130 level, which was really the last hope of support. Now it is lookout below until $100.  The longer-term view is strongly negative until $169 is broken to the upside. Shorter-term traders will be aware of the 9-day moving average offering resistance at $127.56. The MACD, stochastics and RSI all remain in bearish territory. The 15-minute chart does show short-term support at $112 with a large amount of volume at that level on Friday that provided a base for Monday's rally. This may carry on for Tuesday as risk assets are due to bounce, but $130 will likely cap any further gains. Alibaba daily chart above and the 15-minute chart below. The 15-minute shows the large support volume at $112.

Alibaba Expects Recovery Towards 144 and 154

Dec 08 2021

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