Reader Request: GoPro and Alibaba

By | December 2, 2014

A reader requested a review of the GoPro (GPRO) and the Alibaba (BABA) charts:

I looked at the GoPro (GPRO) chart back on 11/19 and highlighted the inverse head and shoulders continuation pattern. A successful breakout to the upside had real bullish potential, but there was never a close above the $85.00 neckline, instead the stock price dropped back below the 50 day moving average, holding at the $70.00 level. The subsequent rally attempt failed at the 50 day average, and the stock price is retreating back to the uptrend support line drawn off the October and November lows. At this point in time, the price action looks like a triangle pattern with the former neckline continuing its role as resistance. Chaikin Money Flow reflects distribution during this consolidation process, and we know that was the case with some insider holdings. Bollinger bandwidth is contracting as the consolidation continues and a breakout, aided by a 27% short interest in the stock, or a breakdown from the triangle parameters could be volatile.

32. GPRO chart

On 11/13, I mentioned the bearish engulfing candle on the Alibaba (BABA) chart. The stock pulled back but held the $107.27 level. It retested that general area on Monday and bounced off it in today’s session. Money flow on this chart is positive.

32. BABAchart

Both of these stocks are expected to perform well going into the holiday timeframe, and a move above the triangle resistance lines on their respective charts will be a confirming signal.

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