Trade Alert: China Update

Holding off on one trade and adding another.

Holding Off On Alibaba Until After Earnings

In a post a couple of weeks ago (Trade Alert: Betting On China), I posted a bullish trade on Alibaba (BABA 0.00%↑) that hadn’t filled yet. Researching it ahead of earnings this week, I got a negative (bearish) composite score:

Alibaba (BABA) (-1.7)

1. Social data: +23

2. PA Options sentiment: Bullish.

3. Setup rating: 7

4. Valuation rating: 9

5. F-Score: 7

6. Recent insider transaction(s): None in the last 12 months.

7. Zacks ESP: -2.39%

8. Zacks Ranking: 3

9. RSI: 55

10. Short Interest: 2.05%

Based on that, I’m canceling my open BABA trade, though I’m still bullish on the stock longer term. Let’s wait for a pullback (perhaps after this week’s earnings) before jumping in. Update: we did just that, placing that BABA trade on February 8th, after BABA pulled back post-earnings.

Taking A Flyer On A Tiny Chinese Stock

I’ve heard good things about X Financial ( XYF 0.00%↑ ), a profitable Chinese consumer financial company that’s trading at about 1x earnings and 0.25x book value. No options traded on it, but I put in a limit order to buy 100 shares at $3.95. At that price, it’s kind of like an options trade.

Another Earnings Trade Coming Later Today

This one looks interesting. Details later today.