After Alibaba broke below the 5-day line, sentiment weakened; a rebound will require stabilization above 135 yuan first.

$BABA-W (09988.HK)$ The current price is around 135.5, consolidating from recent highs after a short-term rebound, and transitioning back into profit-taking pressure. From the daily chart structure, the share price remains above the 20-day line at approximately 131.99, the 10-day line at about 132.42, and the 30-day line near 128.99, indicating that the medium and short-term trend hasn't completely weakened. However, today's decline was more pronounced, and the close failed to stabilize near recent highs, reflecting that the momentum from the earlier rebound has started to wane.

Technically, the range between 133.9 and 135 yuan is the most critical short-term defensive zone. If the stock price can quickly reclaim 135 yuan, it would suggest that today's pullback may just be pre-earnings volatility or short-term profit-taking. If it remains consistently below 135 yuan, the market will likely view this decline as a failed rebound attempt. The first support level below is in the range of 131.99 to 132.42, which is near both the 10-day and 20-day lines, making it a key position for maintaining the short-term structure. A break below 131.99 would bring the next support level near 128.99, around the 30-day line; further breakdown would shift market focus to defending below 130 yuan.

On the resistance side, the first hurdle is at 135 yuan, which is the short-term threshold for sentiment recovery. Beyond that, the next resistances are near 138 yuan and 141.30. The 141.30 level represents the upper Bollinger Band; a breakout here would pave the way for a challenge towards 143 yuan. As for 158 yuan and 200 yuan, these remain distant sentiment targets and should not be considered immediately achievable in the short term.

In terms of investor sentiment, the bullish camp mainly revolves around two themes: one is that Alibaba has outperformed Tencent this year, and the other is that earnings or news could drive another breakout. These comments reflect that some capital still believes Alibaba is in a recovery phase and hasn’t turned entirely bearish due to a single day’s drop. Particularly, mentions like 'if it holds up, we'll see 138, 143, and 158' represent views closer to technical logic, as if Alibaba can hold near 132 and break above 135 again, there indeed might be a chance to test the 138 to 143 range.

However, bullish sentiment also faces an issue, which is that some targets are overly optimistic. For instance, expectations of surging to 200 post-earnings are more emotional speculation rather than goals currently supported by the technical structure. Given the current price level, Alibaba must first address whether it can reclaim 135; only then should 138 and 143 be considered. Discussing 200 yuan would be premature if it can't even stabilize above 135.

Bearish comments are mainly focused on earnings risks and external drags. Some believe there will be a sharp drop after the earnings report, some estimate that the financials won't look good, and others worry that another fall in US stocks tonight could lead to an ongoing downtrend. This reflects that the market is not unilaterally optimistic before the results; instead, quite a bit of capital has opted to reduce risk first. This kind of sentiment is very common before large tech companies' earnings reports because the market doesn't just look at whether the results are good but also at guidance, growth quality, profit margins, and whether the market has already priced it in.

Comments such as 'the main force has started to distribute goods' and 'I'll sell tomorrow' reflect that after today's decline, some investors have started to interpret the pullback as funds exiting. From a technical perspective, today’s decline coupled with amplified trading volume indeed puts short-term confidence under pressure. However, whether it's truly distribution depends on whether the 131.99 to 132.42 support holds. If it rebounds quickly after reaching this zone, it can still be considered a pullback; if it breaks through and continues downward, concerns about distribution will intensify.

The wait-and-see comments are more complex and better reflect the real psychology of the market. Some ask if the earnings need to rise by over 6%, others who entered at 139 are asking for encouragement, some think capital is shaking out weak hands, while others point out that breaking below the 5-day line is too weak. These comments indicate that the market isn’t simply bullish or bearish but has entered a highly sensitive period ahead of earnings. Those holding positions want to wait for a rebound, those without positions want to wait for 130, and short-term funds are waiting to see if there will be momentum after 3 PM or whether overnight external factors align.

The key contradiction for Alibaba right now is that 'fundamental expectations remain, but short-term prices have begun to waver.' If the stock price can hold near 132 before the earnings and break back above 135, the market will tend to view today’s decline as a shakeout. If it breaks below 132 and heads towards 129 to 130, bearish sentiment will further spread, especially putting greater psychological pressure on funds that entered near 139.

In terms of short-term strategy, Alibaba should consider 131.99 to 132.42 as the first support zone, and 135 as the short-term recovery level. Only by holding above 132 and moving back above 135 can it aim for 138 and then 143 again. If it breaks below 132, it needs to guard against a retest of the 128.99 to 130 range. The current price of 133.9 is between support and resistance, offering moderate risk-reward conditions—neither should one rush to chase the dip due to a one-day pullback nor prematurely judge weakness before breaking support.

To sum up, Alibaba's trend isn't completely broken now—it’s the start of a confidence test before earnings. Whether 135 can be reclaimed and 132 held will determine whether this decline is a shakeout or the end of the rebound.May 11 [HK Stocks Podcast] Part 2 - Alibaba, SMIC, Li Auto

For call warrants, consider paying attention to $BIALIBA@EC2608E.C (26562.HK)$ , with a strike price of 150.09 yuan, leverage of about 7x, its premium and implied volatility are the lowest among similar products, making it suitable for investors who are optimistic about the future market and want to deploy at a lower cost. Another option is $UBALIBA@EC2608F.C (26538.HK)$ , with the same strike price of 150.09 yuan and leverage of about 6.6x, its relatively low premium offers a more efficient bullish deployment.

For put warrants, $HSALIBA@EP2607A.P (26071.HK)$ Strike price of 127.28 yuan, leverage of about 6.8x, with a relatively low premium, suitable for investors who are bearish on the short-term trend. $BPALIBA@EP2607A.P (20561.HK)$ Strike price of 128.88 yuan, leverage of about 8.2x, with the lowest premium among similar products, and both implied volatility and leverage levels are ideal, providing better conditions for hedging or bearish strategies.

Bull certificate choices include $HS#ALIBARC2610J.C (56792.HK)$ , with a recovery price of $120, leverage of approximately 8.1 times, and relatively low premium, making it suitable for investors who are optimistic and wish to capture a rebound at a lower premium. $JP#ALIBARC2610O.C (56659.HK)$ Recovery price of $120.5, leverage of about 8.4 times, also offering a relatively low premium and providing a similar bullish deployment option.

As for bear certificates, $HS#ALIBARP2811B.P (63953.HK)$ Recovery price of $160, leverage of about 5.5 times, with a relatively low premium, suitable for investors who are bearish on the market outlook and want to control premium costs. $UB#ALIBARP2811E.P (60998.HK)$ The recovery price is also $160, with leverage of about 5.6 times; its premium is the lowest in its category, and the actual leverage is higher, enhancing capital efficiency for bearish deployments.

Replying to some investor comments:

@32058956: Alibaba has performed relatively stronger than Tencent this year, but in the short term, it still needs to hold above $132, otherwise its outperformance advantage will be weakened by a pullback.

@Island Man: This deployment is relatively reasonable. If it can hold above $132, then targeting $138 and $143 becomes feasible; $158 remains an extended target for now.

@豬腩肉: A significant post-earnings surge requires very strong earnings and guidance support. For now, focus on $135 and $143; $200 is too far off for the time being.

@ZGH天下第一莊: If the market expects poor results, the stock price will first reflect weakness below $135. The key remains whether $132 can hold.

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Reminder: This article does not constitute any investment advice.

This article is for reference only and does not constitute any investment advice. 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; asset performance should be comprehensively evaluated using other sources of information, and trading decisions should not be made solely based on this article. Please note that past performance is not indicative of future results.

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