Technical analysis

Two stocks to watch: Week 9, 2024

By Antreas Themistokleous

28 February 2024

3207 nio and jd week 9

This week, we look to China and the automobile manufacturer Nio Inc. as well as Chinese e-commerce giant JD.com.

NIO Limited

NIO Limited's (NIO) share price managed to cover the downward move through the quarter and closed at almost 0% change. The company’s earnings report for the fiscal quarter ending December 2023 is expected to be released on Tuesday 5 March before the market opens. The consensus EPS is $-0.51 against $-0.51 (USD) in the same quarter last year. The company is yet to become profitable since its incorporation and this is a major fact that deters investors from trusting the company’s growth. As of 30 September 2023, the company had increased negative net income mostly due to higher costs of goods sold. Negative net income grew by almost 10% while the cost of goods sold increased by more than 50% year over year. Also, JPMorgan downgraded NIO stock to "underweight" with a lowered price target of $5 per share, reflecting a bearish stance on the company's future performance.

Technical analysis shows that the price has been trading in a declining channel formation for the last couple of months with no significant indications of a reversal to the upside just yet. In addition, the price is currently trading below all technical indicators while the Stochastic oscillator is not recording any oversold levels–there is still room for further move South.

The 50-day moving average is still trading below the 100-day moving average, further validating the bearish trend. The first area of possible support might be around $5, which is the psychological support of the round number and is also an inside support area where the price reacted in January 2020.

JD.Com, Inc.

Shares of JD.com, Inc. (JD) managed to close the last quarter of the year on a neutral balance after some pretty volatile months. The company’s earnings report for the quarter ending December 2023 is expected to be released on Wednesday 6 March before the market opens.

The consensus EPS is $0.56 against $0.54 in the same quarter last year. The company has a streak of 5 consecutive months of increased net income and is on the move for a sixth. The current ratio is above 130%, showing that there is the ability to withstand any short-term financial difficulties. In comparison, the dividend yield is more than 2.50% which is making the company a quite attractive addition to long-term investors’ portfolios.

From a technical analysis perspective, the price is trading near the technical resistance area of the 38.2% Fibonacci retracement level. If it manages to break above this area, then the short-term resistance might be seen around the $24.50 price level, which consists of the 50-day moving average and the upper band of the Bollinger bands.

However, this might be a short-lived projection since the Stochastic oscillator is approaching extreme overbought levels and the 50-day moving average is still trading below the 100-day moving average, indicating that the valid trend is still bearish, and the medium-term outlook might also be bearish.


This is not investment advice. Past performance is not an indication of future results. Your capital is at risk, please trade responsibly.


Author:

Antreas Themistokleous
Antreas Themistokleous

Antreas Themistokleous is a trading specialist in Exness. He is a Certified Financial Technician since 2018. As a member of the Society of Technical Analysts, Antreas is implementing advanced use of indicators and patterns to conclude in an action plan for different trading strategies.