Swing Trade Idea (BABA) – May 23, 2024
Our bearish trade for Thursday, May 23rd is Cummins Inc. (BABA). BABA is part of the industrial sector, which has performed at 4.78% over the last month, with BABA overperforming at 14.03% over the same period.
BABA had a sharp retracement as it traded into a key area of resistance of at $90. BABA is currently overbought and a continued pullback to support of around $75 is likely. We will take this opportunity to play a Credit Spread that provides a return of a premium of above 30% of the width.
As a close, if BABA were to trade below $90 for multiple days, this would invalidate our analysis and we will consider cutting losses on the trade. We will also consider cutting losses on this options trade if the value of the vertical spread moves above $4.32 Debit.
