As BABA was listed in both the U.S and HK market, what happened in HK will give us a clue of where it might go tomorrow(U.S stock closed today). By applying measured-move skill, BABA is likely to gap down to retest the 208-211 level.
What shall we do then if you have the exposure to the stocks. Probably, we need to ask ourselves questions below:
1. Did the fundamental change? To some extent, yes. however, BABA is still a good company, it just may not grow as fast as it used to be.
2. Is it cheap? Everybody has his or her own answer. For me, it has been dropped from the peak by more than 30%. The valuation is attractive now(PE ratio around 26).
3. What’s the trend now? Technically, as I mentioned in my previous idea, the downtrend has been terminated, if you use the downtrend line as your ‘benchmark’ to measure. The formation of higher low and breakout is another clue. Though, I might be wrong. You can still be stopped out provided the perfect signals and candle formations. The key is position sizing control to reduce the risk.
If you feel comfortable with the answers, then you can take actions accordingly, e.g. buy some shares or calls. Investment tool is another odds-enhancer to improve your portfolio performance.
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Stay safe and trade safe!