Alibaba has broken out over $100.00 to trade at a new all-time high ahead today ahead of tomorrow’s earnings report. The street is expecting the company to report adjusted EPS of $2.74 on sales of $15.99B. A record high share price suggests that many traders are expecting the company to come charging out of the gate. With expectations running so high, there is a growing risk of disappointment on earnings or guidance, particularly since this is the first report since the shares completed their IPO back in September. Because the company doesn’t have a track record of reporting (except as part of Yahoo) and particularly guidance the risk of expectations being off may be higher than usual this time out. Don’t forget it took Facebook a few quarters to get its footing with the street in terms of managing expectations and outlooks. The rally of recent weeks has left the shares highly overbought on the RSI so Alibaba really needs to deliver, or run the risk of joining the line of this quarter’s parade of post-earnings selloffs like Netflix, Twitter, Facebook and others. On the downside, $100.00 may emerge as initial round number support, followed by previous lows near $97.00 then $93.40, near its opening day close. Should the shares continue their advance, upside measured tests may appear near $103.00 (based on last week’s trading range) or $109.75 (based on the opening day trading range)
Trading Analysis: Alibaba flying high into its first earnings report, perhaps too high?
19:00, 02 November 2014