It’s been a challenging time to be a short and with Trump pushing for more interest rate cuts I think the overall market could just keep marching higher through the election in November. Chinese stocks that need he nice reversal today and look to be moving higher to close the gap created this morning.
The first is Alibaba Group (NYSE:BABA). It’s a classic stock with a lot of volume and good option activity. You can see the nice hourly chart consolidation moving sideways here.
BABA Hourly Chart
My only concern with this stock is that on the hourly chart the first candle was bearish. I preferred to have that be bullish. Nonetheless, this has a lot of potential and a great risk-reward.
BIDU Hourly Chart
The second stock that might bounce today is Baidu Inc (NASDAQ:BIDU). This one has a bullish candle on the hourly chart to start but doesn’t have as much room to run. Still, this has a great set up that I believe is likely to fill the gap in the coming days.
Both trades are pretty basic setups. The stop is a close (daily normally) below the recent lows, with a target of gap fill.