Retirement investors looking for long-term gain potential in the technology sector might want to look overseas for upside potential in 2018.
That's because, with the domestic tech sector in turmoil, one gigantic Chinese technology firm is standing out as a solid alternative to the FAANGs -- I'm talking about e-commerce giant Alibaba Group Holding Ltd. (BABA) .
Alibaba has been a stellar performer in the past year, rallying more than 63% in the trailing 12 months. That's compared to a 12.9% total return for the S&P 500 over that exact same timeframe. More importantly, Alibaba has been able to hold onto its gains in spite of the recent pressure on the tech sector.
While U.S. peer and Action Alerts Plus holding Amazon.com Inc. (AMZN) has shed around 13% of its market value in the last three weeks, threatening its uptrend, Alibaba's pullback has been less than half that over the same timeframe.
Even better, Alibaba is teetering on the edge of a major buy signal this week. To figure out how to trade it, we're turning to the chart for a technical look.
Since last summer, Alibaba has been bouncing its way higher in a textbook example of an uptrending channel. Simply put, it's been a "buy the dips stock" stretching all the way back to July 2017. And it's potentially about to show investors another buyable dip this week.
After correcting alongside the broad market in the last week or so, Alibaba is testing trendline support for the sixth time. A bounce higher is a signal that buyers are still in control of the price action here.
Relative strength, the side indicator down at the bottom of Alibaba's chart, adds some extra confidence that shares are likely to continue to move higher. Relative strength has been in its own uptrend since last summer, signaling that Alibaba is systematically outperforming the rest of the market right now. As long as that relative strength line remains in an uptrend, shares are statistically predisposed to keep on outperforming.
Alibaba has been somewhat less prone to downside volatility than many of its tech peers -- that makes it a solid option for retirement investors searching for tech sector exposure in this newly volatile market.
Alibaba's modest bounce this afternoon looks like proof that shares are set to kick off an up-leg.
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