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BABA about to break into a bullish trend

China e-commerce giant Alibaba (BABA) turned in a quarterly earnings report early Thursday that largely eased concerns of slowing performance, despite a sluggish Chinese economy.

Alibaba reported revenue of $3.75 billion for its fiscal Q4 ended March 31, beating the Wall Street consensus of $3.58 billion. Sales rose 39% in local currency year over year, the company’s highest growth rate in the past four quarters.

Earnings per share minus items rose 88% to 33 cents, but that was far below the consensus of 55 cents. Costs associated with new businesses initiatives and rising logistics and order-fulfillment costs weighed on the company.

Still, Alibaba stock rose 4% in the stock market today, to 78.86. The stock is up 33% from a seven-month low of 59.25 touched on Feb. 9.

Alibaba credited the revenue beat to strong growth in mobile users, active buyers and transactions on its China e-commerce platforms.

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BABA Daily Chart 5/9

(click to enlarge)

Alibaba shares have been trading up since February, but are really in consolidation mode.

The daily chart shows price action since BABA IPOed. We can see that price fell from a high of 120 in 2014 to a low around 57 a year later in 2015. Since then, price has been relatively sideways. 

The latest rally is challenging a falling speedline and a hold above 80, should be a sign that the market wants to rally from this consolidation pattern, which would make it a price bottom. 

Also, the RSI has tagged 70 and is staying above 40 this time. This reflects development of bullish momentum. There is also a slingshot developing - that's when price crosses above the moving averages and then bounces off of them as support. The RSI and price action reflect a market that is ready to enter a new bullish trend. 

Based on the technical picture, I would look for upside towards the 95-96 support/pivot area. There is upside to 100 too, but I would probably take profit earlier if price gets to 95-96.