By Mike Juang

Investors looking to invest in foreign companies like Alibaba stock could find luck in buying on a pullback. But not all pullbacks provide the right mix of opportunities and risk.

Alibaba (BABA) has recently shown signs of bullishness, with several periods of consolidation forming in the stock throughout last year. Most recently, the stock is in a 71-day consolidation pattern that began on Oct. 3, with a buy point of 192.67, the base's prior high point as the stock seeks to complete the chart pattern.

Shares have surged over the past several sessions, racing back above the 50-day moving average.

David Cox, senior portfolio manager at Raymond James, says the stock is overall in a clear uptrend and a leading stock among publicly traded China stocks. Alibaba's multimonth pullback in a clear uptrend is "an opportunity to buy with a lower risk point than we would have to do if we get caught chasing," Cox said.

The Risks Of Chasing A Pullback In Alibaba Stock

Buying a stock in a pullback can create risk, however, since the chart has not completed its stock pattern, and has not given confirmation that an uptrend will continue.

However, Cox says a risky move can work for investors who are looking for a longer-term investment and "not a fan of buying into" a chase.

Cox acknowledges there can be headline risk around a China-based stock like Alibaba. China-based stocks can often be subject to ongoing trade tensions between the U.S. and China.

Alibaba, a major cloud-services provider, recently announced a new foray into AI-powered shopping through a chatbot update that makes it more capable. On Monday, shares gapped higher as buyers surged into the stock. Shares have continued to trade higher, adding to a four-day rally in Alibaba stock. Alibaba maintains a Composite Rating of 77 and is ranked No. 10 in the retail-internet group according to IBD Research.

Follow Mike Juang on X at @mikejuangnews and on Threads at @namedvillage.

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Source: Investor's Business Daily