Alibaba Soars 7.5% – Is This the Breakout the Market Has Been Waiting For?

• Alibaba (BABA) surges 7.5% to $116.34, hitting an intraday high of $117.20.
• Nvidia’s China chip approval sparks optimism, lifting Chinese tech stocks amid improved U.S.-China trade sentiment.
• Technicals show RSI at 40.76 (oversold recovery), with price above 200-day MA ($108.94).

Today’s rally marks a pivotal moment for Alibaba, as geopolitical tensions ease and AI-driven demand reignites. The stock’s 7.5% leap – the largest since March – positions it near resistance levels, with traders eyeing how it holds above $115.

Nvidia’s China Chip Approval Sparks Tech Sector Optimism
Alibaba’s surge is directly tied to positive news from U.S. regulators approving Nvidia’s (NVDA) sales of H20 AI chips to China. This lifted Chinese tech stocks broadly, with Alibaba rising alongside Baidu and Tencent as investors bet on stronger cross-border tech collaboration. The rally reflects renewed optimism about U.S.-China trade relations and AI adoption in China’s economy, with Alibaba’s cloud and AI divisions poised to benefit from the thaw.

Software Sector Mixed as Microsoft Leads Modest Gains
While Alibaba’s 7.5% jump outperforms its peers, the Software & Services sector remains cautious. Microsoft (MSFT) – the sector leader – rose just 0.69%, underscoring a divergence between Alibaba’s AI-driven optimism and broader software market stagnation. This gap suggests investors are selectively betting on China’s tech resurgence, with Alibaba emerging as the sector’s most aggressive beneficiary.

Leveraged ETFs and Bullish Options Highlight Alibaba’s Momentum Play
Technical Setup:
• 200-day MA: $108.94 (current price $116.34, above trendline)
• RSI: 40.76 (oversold recovery)
• Bollinger Bands: Price above lower band ($103.95), nearing upper band ($119.00)

Bulls aim to push BABA above $119 (upper Bollinger Band), while bears target $112 (200-day MA support). The GraniteShares 2x Long BABA Daily ETF (BABX) and KraneShares 2x Long BABA Daily ETF (KBAB) amplify momentum, with BABX up 15.2% today and KBAB gaining 15.2% – ideal for aggressive bets.

Top Options Picks:
1. BABA20250725C112 (Call) – Strike $112, Exp 7/25
- IV: 37.4% | Leverage: 20.25% | Delta: 0.739 | Theta: -0.292 | Gamma: 0.0429
- Why? High gamma (0.0429) and moderate delta (0.739) offer premium sensitivity to price moves. With BABA above strike, this call captures 288% upside in a 5% rally to $122.
2. BABA20250725P110 (Put) – Strike $110, Exp 7/25
- IV: 36.6% | Leverage: 163.99% | Delta: -0.174 | Theta: -0.036 | Gamma: 0.0347
- Why? High theta (-0.036) accelerates time decay for shorters, while gamma (0.0347) amplifies gains if price retraces to $110. A 5% pullback to $110.50 yields max payoff.

Hook: Aggressive bulls: Buy BABX for 2x leverage. Prudent traders: Fade $119 resistance with the $110 put.

Backtest Alibaba Group Stock Performance
Following an intraday surge of 8% for BABA, the stock generally exhibited positive short-to-medium-term gains. The 3-day win rate was 49.47%, the 10-day win rate was also 49.47%, and the 30-day win rate was 46.14%. This indicates that BABA tended to maintain its momentum after the initial surge, although the returns slightly diminished over longer time frames. The maximum return during the backtest period was 0.21%, which occurred on day 48, suggesting that while the stock had further upside potential, it tended to consolidate gains rather than accelerating them.

Alibaba’s Rally Faces Key Resistance – Will Bulls Hold the Gains?
Alibaba’s 7.5% surge signals a potential breakout, but resistance at $119 looms large. Investors must watch Microsoft’s (MSFT) 0.69% gain as a sector benchmark – if software peers follow, BABA’s rally could deepen. Near-term focus remains on U.S.-China trade data and AI adoption rates. Action: Fade the move above $119; below $112, consider the $110 put. This rally isn’t over, but the next 24 hours will define momentum.