PreMarket Prep Stock Of The Day: Alibaba

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

For those who don't have the time to tune in live or listen to the podcast, Benzinga will highlight one stock that merits further discussion. This analysis is not a buy or sell recommendation.

Sometimes an earnings beat isn't good enough to push an issue higher. That happens to be the case with Alibaba Group Holdings Ltd. BABA, which is the PreMarket Prep Stock Of The Day.

Big Winner From March Low: When the broad market swooned in March, it took Alibaba along with it. From its January high ($231.14) it bottomed out in March at $169.95 and began to rebound along with the market. That low came in just below a pair of lows from Oct. 24 ($170.88) and Oct. 25 ($170.88) of 2019.

Makes New All-Time High In July: Whereas the S&P 500 index just made a new all-time high, Alibaba took less time. In fact, it breached its January high on July 6, when it reached $240.48. Three days later, it made its current all-time high when it reached $268 and posted its all-time closing high on the same day at $261.58. That area was revisited in early August but found major sellers just under $266, when it put in a pair of high just under that on Aug. 5 ($265.98) and Aug. 6 ($265.70).

Before the open, the company announced an adjusted earnings beat of 11 cents per share, as well as a sales beat.

PreMarket Pop: Following the announcement, it made a run at the August highs but was turned back at $265. After reversing course, it found some major sellers that pushed the issue all the way to $255.80 in a matter of seven minutes.

Tough Call: Based on the pre-market action, it was obvious there were some big sellers lurking either to exit a long or initiate a short. Show producer Spencer Israel recalled similar price action in the issue on the days of previous earnings releases. The only relevant level for the day in the issue mentioned was its closing price from Wednesday at $260.59.

Price Action During The Regular Session: As of 1 p.m. ET, the volatility from the pre-market session hasn't spilled over into the regular session. After a lower open, it made an attempt to reach its closing price, but came up shy only reaching $258.88, and reversed course.

The ensuing decline took the issue well beyond Tuesday’s low ($256.06) and Wednesday’s low ($257.38), but found buyers way ahead of Monday’s low ($250.09), only reaching $254.18.

It has grinded higher, but has yet to make a new high for the session.

Image: Andy Mitchell, Flickr