Alibaba under pressure before earnings, 129.4 yuan support level becomes key to future trend

Under pressure before earnings, currently down 3.12%, last traded at $133.4. Market sentiment is cautious as the weak outlook for the upcoming financial results weighs on the stock’s performance. Additionally, new developments in the e-commerce sector's revenue are drawing widespread market attention.

On the e-commerce front, Taobao's 'Billion Subsidy' channel officially launched a 'Lobster Farming Hardware' subsidy event on March 18, offering targeted subsidies for computer products that meet the computational requirements of OpenClaw’s 'Lobster Farming.' Public data shows this event covers mainstream brands such as Apple, Huawei, Lenovo, and Asus, with over 20 compatible computer models listed, and the maximum subsidy per unit reaching 2,600 yuan.

Alibaba will announce its third-quarter financial results for the period ending December 31, 2025, after today’s market close. Bloomberg’s aggregated market forecasts indicate that the group’s Q3 revenue is expected to reach 290.14 billion yuan, representing a 3.6% year-on-year increase; adjusted net profit is projected at 31.04 billion yuan, reflecting a 39.2% year-on-year decline. The market broadly anticipates weak profitability this quarter, mainly due to two factors: First, sluggish performance in the core e-commerce segment's Gross Merchandise Volume (GMV), triggering operational deleveraging and causing slower growth in Customer Management Revenue (CMR). Excluding instant retail and food delivery businesses, profits are expected to decline. Second, additional investments in large-scale models and artificial intelligence applications across various business segments may further compress overall profitability.

From a technical perspective, Alibaba’s current share price is fluctuating around the 10-day moving average (MA10: 133.02 yuan), maintaining relatively stable short-term movement. However, the stock remains below the 30-day moving average (145.03 yuan) and the 60-day moving average (150.43 yuan), indicating that the medium-to-long-term downtrend has not yet fully reversed, and restoring market confidence will take time.

In terms of key price levels, the first major support is at 129.4 yuan, the upper edge of a recent consolidation range, which provides strong short-term support. If the price breaks below this level decisively, it will test the next critical low of 125.1 yuan, a point where prior bearish pressure was concentrated, offering stronger mid-to-long-term support. On the upside, the first resistance target is 147 yuan, corresponding to the midpoint of a previous small trading range with substantial trapped positions. If the price can break through this zone with high volume, it may further challenge the second resistance at 155.7 yuan, near the 60-day moving average and the previous high, where significant selling pressure from trapped investors is anticipated.

From the perspective of key technical indicators, although the Relative Strength Index (RSI) is at a neutral level of 41, the Stochastic Oscillator (KD) has already signaled a buy, suggesting short-term momentum is shifting from weak to strong. More importantly, the Commodity Channel Index (CCI) has exited the 'severely oversold' zone and turned into a buy signal, which often indicates that a downtrend may be temporarily over and the stock price has the potential for bottoming out and rebounding. Additionally, the Momentum Oscillator and Bull/Bear Power indicators have also simultaneously issued buy signals, further solidifying the technical foundation for a short-term rebound.

However, some indicators still suggest caution: The Williams %R and Psychological Line indicators remain in the neutral range, while the Average Directional Index (ADX) shows the current trend strength is moderate, implying conditions for a one-sided sharp rise are not yet fully ripe; Bollinger Bands also indicate that the stock price is still operating in the lower-middle region and requires an effective breakout above the middle band to confirm a strengthening trend. Overall, the consensus among multiple oscillators points to a pattern of 'short-term bottoming, with a rebound expected.' The summary signal from technical indicators is 'Buy,' with a strength rating of 9.

Derivatives market data also confirms optimistic expectations of capital. Prior to earnings disclosure, market funds were clearly leaning towards long positioning. Both bull warrants and call warrants saw increased volume, reflecting strong market expectations for a stock price rebound after earnings are released. Specifically, the call warrant street volume rose from 8,979.97 million shares on March 17 to 9,058.11 million shares on March 18, an increase of 0.87%; the put warrant street volume increased from 782.46 million shares to 798.34 million shares, a rise of 2.03%; the bull warrant street volume surged from 1,212.34 million shares on March 17 to 1,349.96 million shares on March 18, an increase of 11.35%; meanwhile, the bear warrant street volume slightly decreased from 212.52 million shares to 205.77 million shares, a drop of 3.18%.

Since mentioning it on March 12, Alibaba has cumulatively risen by 1.82% over two days, driving most derivative products to positive returns. On the mentioned day, $UB#ALIBARC2608F.C (54590.HK)$ the two-day increase reached 18%, $UB#ALIBARC26074.C (53784.HK)$ with a concurrent increase of 20%, $BIALIBA@EC2608E.C (26562.HK)$ while the increase was 5%.

For investors who believe the stock price will successfully bottom out and challenge resistance above, they may consider out-of-the-money call warrants with moderate premiums. For example, $UBALIBA@EC2607D.C (26262.HK)$ with a strike price of HKD 165.1, its standout feature is that both the premium and implied volatility are the lowest among similar products, effectively reducing holding costs. Another option is $JPALIBA@EC2607B.C (26517.HK)$ , with the same strike price of HKD 165.1, offering ideal leverage and implied volatility, providing higher potential return elasticity. If investors seek higher leverage and can tolerate forced liquidation risks, they might consider bull warrants. $UB#ALIBARC2608J.C (55095.HK)$ , with a recovery price of 127 yuan, offering approximately 10.2x leverage and relatively low premium, suitable for aggressive investors who believe the stock will hold support and rebound in the short term.$JP#ALIBARC2609A.C (54759.HK)$ , with a recovery price of 125 yuan, providing about 8.9x leverage and an attractive premium.

Investors expecting a rebound to stall or needing to hedge existing position risks can consider put warrants.$BIALIBA@EP2606A.P (20584.HK)$ , with an exercise price of 129.9 yuan, offering a relatively low premium and serving as a cost-effective bearish tool.$DSALIBA@EP2606A.P (20535.HK)$ , also with an exercise price of 129.9 yuan, featuring the lowest premium and implied volatility, making it highly cost-efficient. For high-leverage bearish options, bear contracts could be considered.$JP#ALIBARP2812L.P (64231.HK)$ and $UB#ALIBARP2811F.P (65172.HK)$ , both with a recovery price set at 154 yuan. Among them, J.P. Morgan’s bear contract has the lowest premium and relatively higher actual leverage; UBS Group’s bear contract offers the highest actual leverage in its category, both suitable for betting on a pullback before a key resistance level.

Would you choose to position yourself ahead of Alibaba's earnings release? At the current price level of Alibaba, do you think it's suitable for long-term investment or short-term speculation? Feel free to share your insights in the comment section. For more market analysis, stay tuned to ‘HK Stock Warrants Jenny’ for daily updates!

Reminder: This article does not constitute any investment advice.

This article is for reference only and does not constitute any investment advice. The market data, opinions, and analysis contained herein may change at any time without prior notice. We are not responsible for any loss or damage caused by reliance on the information in this article. Technical analysis only shows whether certain technical conditions are met; a comprehensive assessment of asset performance should be conducted using additional data. Decisions to trade should not be based solely on this article. Please note that past performance is not indicative of future results.

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