How we saw BABA when others didn't
Prospero.Ai 03/29/23 Newsletter
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Covered in this letter:
Deeper dive (higher signal frequency) into QQQ and SPY Net Options Sentiment
Biggest movers for Net Options and Net Social Sentiment 03/29 Trading Watchlist
Advanced trading recommendation
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BABA (Alibaba Group Holding Ltd) might be our best case study yet
We had such high conviction on BABA we made it our only Bull pick in the last letter here AND our Weekly 3/26 following. Not to mention in the 03/22 letter it was also the first time we recommended an un-hedged straight long options play in our advanced trading idea “If you trade options we say let it rip with some Calls here.” We weren’t just recommending it we placed more Bullish emphasis on it than ever before.
Our signals visualizing the extent institutions are Bullish or Bearish in the options markets made a strong case that a gain was coming. What is even more exciting is that our metrics moved up before major news events both times. No better way to demonstrate our incredible value/approach to show you with us you can be ahead of the market. Even more impressively the process we passed on to you in the 1st BABA run could have helped you find this 2nd run on your own, even without the help of a newsletter! Some summaries on it if you’d like more depth on how we did it.
Combined 2 event case study: We call BABA Bull run before news 2X times 03/28/23
Does it have more room to run? We say yes. This article agrees: Alibaba Stock Could Double Over Its Split Plan. There Are Even More Reasons to Like It.
It is important to note a lot of risk priced into BABA was concerns it was growing too big and the Chinese government did not like that. Not only do these units have more value together, breaking them up highly de-risks government interference as they no doubt are a heavy hand behind this transaction.
Our original thesis is holding well too: “BABA looks strong all around. High Upside Breakout to Downside Breakout ratio. Profitability + Growth is well above average and Net Options Sentiment is trending in the direction of a big move. Also, Downside Breakout trending lower has been an interesting surprise as a Bull signal lately, and this trend looks good.”