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Nearly every single stock market index of any given major economy has so far outperformed in 2024, with the notable exception being China’s Hang Seng, Shanghai and Honk Kong indices, as prospects for looser monetary policy conditions by central banks nudge international investors upsize their equity allocations, whilst keeping cautiously their other foot in money market funds. In this report we aim to present and analyse the latest fundamental drivers and economic developments that influence the performance of Alibaba, Disney and Eli Lilly, present their respective earnings forecasts and conclude with a technical analysis of BABA.

Equities report

Alibaba (BABA)

The Chinese giant who specializes in online retail and e-commerce technology services, steps forth to deliver its earnings results later today and according to analysts’ forecasts, Alibaba beat both its Earnings per share and Revenue targets in the fourth quarter of 2023 by $0.07 and $203M respectively. $BABA trades near the $78 per share level, hovering close to a 3-month high peak and from a technical standpoint it may appear as a bargain for long-term position traders.

Chinese equities have been on a steady value-shedding journey since the start of the year as pessimism for the nation’s smooth recovery progress hit peak, forcing traders to sit on the sidelines, eagerly awaiting for authorities to step in and ‘fix’ the situation. Earlier this week Beijing officials pledged to support capital markets, by shoring up approximately 1T Yuan via a state-run, sovereign investment fund, seeking to normalize unfavorable equity market conditions, by taking stakes of domestic companies. Not only, that the government deployed short selling restrictions to contain the fallout and keep scavenging speculators at bay.

These aforementioned developments are expected to attract flows inland and the prospect of intense dip buying activity maybe in the making, as major financial institutions have now received the ‘green light’.

Walt Disney (DIS)

The world-renowned entertainment company, that produces iconic films and stories for both kids and adults, but also famous for its majestic fairytale-esque theme parks and resorts, is scheduled to release its latest earnings results in today’s equity report. Analysts forecast that Disney beat its Earnings per share target by $0.11 yet missed its Revenue target by approximately -$170M, in the fourth quarter of 2023. $DIS trades close the $100 mark as of this writing and currently heads on to challenge the closest peak formed back in May of 2023, after it rebounded sharply by over 20% from a 3 and half year low back in November.

As of the earnings call, investors will be looking closely at the Disney+ subscription growth results as the pressure mounts, since Netflix, its largest competitor, topped growth estimates in Q4. Of interest will be the clarifications about the company’s newly announced a joint venture with Warner Bros and Fox, aiming to bring live streaming sports-related events to their viewers, which serves as move to even out the playing field in the sports entertainment arena, after Netflix announced plans to partner up with WWE and integrate wrestling events in their platform.

Eli Lilly (LLY):

The world’s largest pharmaceutical power-player, according to market cap metrics, proved once again why it’s the ‘top dog’, as it blew away both its earnings per share and revenue targets in Q4 and pleased with this outlook for the quarters to come.

What has driven the company’s outperformance were the blowout sales of its new obesity drug, Zepbound, but also its diabetes-targeting staple product, Mounjaro, which exceeded Wall Street’s expectations. Zepbound is an injectable prescription medicine that may help adults with obesity or excess weight (overweight) who also have weight-related medical problems lose weight and keep it off. Company notes that it should be used with a reduced-calorie diet and increased physical activity.

In regards to future equitie outlook, the order pileup for Zepbound, indicates superb demand for the innovative weight loss therapy product, which lays the foreground for further upside for the pharma giant. The pharma juggernaut carries on with its astonishing parabolic ascent, hitting fresh all-time highs week after week and currently found trading close to the $740 range. Since the start of 2023, the stock soared by over 100% and since 2022 is up by more than 175%.

Equities Technical Analysis

BABA Daily Chart

USD/USD Technical Analysis: A chart displaying the historical performance and trends of the USD against itself.
  • Support: 70.00 (S1), 64.00 (S2), 58.00 (S3)
  • Resistance: 79.00 (R1), 87.00 (R2), 95.00 (R3)

Looking at BABA Daily chart we observe that the stock is currently at the final stage of forming an inverted Head & Shoulders formation, at the bottom of a yearslong decline. We hold a bullish outlook bias for the company, given the break above the neckline, yet the ultimate confirmation will be the definitive break above the critical 79.00 (R1) resistance barrier.

Blowout equities earnings could facilitate that. Supporting out case is the formation of consecutive higher lows of the RSI indicator below our daily chart but also the fact that currently it registers a value of 63, indicating that the bulls are in control. Furthermore, the MACD line briefly crossed above the zero line this week, indicating a shift in direction of the short-term trend and bullish momentum may undergo a rapid buildup, completing the reversal. Also from a fundamental standpoint, the government support measures add more conviction and could entice traders to indulge in some gold old fashioned dip buy activity since the current levels are indeed a bargain.

Should the bulls capitalize on the opportunity and find enough resolve, we may see the definitive break above the crucial $79.00 (R1) resistance barrier and descending trendline initiated since start of 2023, which will enable the move towards the closest $87.00 (R2) resistance peak.

Should on the other hand the bears take over, we would expect BABA to return to the $70.00 (S1) support level and should bearish momentum accelerate, we may see a move closer the $64.00 (S2) support base and possibly below, to levels once seen before in October of 2022.

Disclaimer: This material is for general informational & educational purposes only and should not be considered investment advice or an investment recommendation. T4Trade is not responsible for any data provided by third parties referenced or hyperlinked, in this communication.

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