The U.S. stock market is overbought, and the weak seasonal period is upon us.

Overbought markets look for excuses to sell off. Please see “Will Trump’s lack of leadership become an excuse for a big selloff in stocks?

If the momo (momentum) crowd that has been running up this market panics and their panic results in a big spike down, it may create buying opportunities in many stocks. I often get asked: “What is the one stock to buy if the market dives?” Even though I advocate a portfolio approach, this is a legitimate question.

Alibaba BABA,  stock is the one to buy. First and foremost, let me disclose that Alibaba stock is in the model portfolio of ZYX Buy Change Alert of The Arora Report, and there are nice unrealized gains on the stock.

Many call Alibaba the Amazon AMZN, of China. A strong case can be made that Alibaba stock is much cheaper than Amazon, and the company itself has better growth prospects and a better business model than its U.S. rival. In China, JD,  is more similar to Amazon than Alibaba is.

Alibaba just reported earnings that were better than the consensus and better than the whisper numbers. Stocks move, not based on actual earnings, but on the differential between reported earnings and guidance compared with the whisper numbers. I can write here details of the numbers and all sorts of fundamental statistics. However, such data have been regurgitated thousands of times on dozens of sites on the internet. For this reason, such data provide no edge.

To be successful in the long run, you need an edge. Let me help you with an edge in Alibaba.

The chart

Please click here to see an annotated chart of Alibaba stock….Read more at MarketWatch

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