Nio (NIO) is lower in June 9's trading session after the electric-vehicle company reported earnings before the open.
It’s been an interesting stretch, both for EV stocks and for Chinese equities.
The latter — which includes Alibaba (BABA), JD.com (JD), Li Auto (LI) and others — has had a brutal run. As if the selloff in tech and growth stocks wasn’t enough, delisting fears and worries about China’s government have driven these stocks off a cliff.
Lately, though, they’ve enjoyed a strong bounce — Nio included.
The automaker beat analysts’ expectations for both earnings and revenue, growing the latter by 24% year over year. But guidance of roughly $1.59 billion in revenue for next quarter came in below expectations of $1.79 billion.
That is likely the catalyst for today’s fall, even as Tesla (TSLA) rallies modestly on the day following its May deliveries in China.
Is Nio a stock to run from or a buy-the-dip opportunity?
Trading Nio Stock
Chart courtesy of TrendSpider.com
I’m a bit surprised a buy-the-dip approach is even possible given the current market conditions.
In early May, Nio stock undercut the first-quarter low near $13. However, it quickly reversed from there and began an impressive uptrend, climbing 75% from last month’s low to this month’s high.
From this week’s high, Nio stock is now pulling back on the earnings report. Amid the pullback, the shares are bouncing from the 10-day moving average — active support.
As long as it can hold Thursday’s low at $18.45 and the 10-day, then the bulls remain in control. They’ll want to power Nio stock up through the 21-week moving average, putting $20 and this week’s high at $20.45 in play.
Over $20.75 puts Nio back above the 61.8% retracement of the stock’s trading range since it gapped down on Feb. 10.
Ultimately, though, continued momentum will have the bulls looking at the second-quarter high near $24, followed by the gap-fill level at $27.22.
On the downside, a break of the 10-day moving average could usher in more selling pressure. Specifically, it will thrust the 50-day moving average and uptrend support into the spotlight.
Below that puts $15 to $16 in play.
It’s tough to be a confident buyer in something like Nio stock because it has fallen so far from the highs.
But as long as the short-term trend remains with the bulls, then that’s where our bias will fall until we're proved wrong -- which would happen if active support fails.
