NIO has been seen by critics and investors alike as a knock-off of Tesla. It's a Chinese company with access to huge market, and a lot of Chinese dollars have been betting on the success of this fundamentally flawed company. I love the bullish pennant forming on the daily/weekly charts. There's a few big red flags that scream market manipulation (check out the weekly candle for Jul 13 relative to volume). Price support is somewhere around $5-6, which means that if she breaks out below the pennant, it's going to be a very quick ride down. The longer this stock consolidates at these higher prices, the more bullish I get. That said, one really bad news cycle is all it will take to give us another Jul 13 weekly. Given its close correlation with Tesla, I'm more inclined to trade TSLA, given the inherent problems with buying Chinese stocks at the moment. As much as I question the financial reporting of Tesla, I'm beyond concerned when it comes to this particular company.
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Note: Blue AREA is TSLA.
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Selling volume has been slowly inching up since end of July, but overall accum/dist is flat. I think a breakout below the pennant will create a frenzy of selling. Short interest is high right now (27% as of 8/11). Staying neutral for now. Looking for big volume break WITH confirmation. That big candle after earnings didn't materialize, but selling eased back into the consolidation pattern. Tomorrow will bring more clarity.
With upcoming earnings on 11 Aug, I think NIO will beat estimates (albeit fundamentally flawed), sending the price of NIO higher. I also think TSLA bulls will use this news to push TSLA higher as well, because EV sentiment is very high for the foreseeable future, and TSLA/NIO are the front runners. I’ll bullish on NIO and TSLA and long on options in both stocks. I’m hoping for a bullish next week ;).
SLOPolarBear
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@chiefwils0n, I like your idea about TSLA taking feedback from NIO -- we haven't seen that dynamic YET, but I suspect we will soon. I was swing trading NIO between September and November 2019. In the 2nd week of November, the dynamics changed and you could tell that a whole new crowd of fresh enthusiasm for NIO was starting to buy. The volume surged, often quite dramatically, but the pullbacks didn't scream SELL. If you do a comparison chart with NIO and TSLA assuming a purchase in both stocks around the third week of November, you can see that the NIO market is coupled with Tesla and clearly taking cues from its price movements. NIO is rightly putting a ton of capital towards R&D, which they're clearly behind Tesla on. But it seems like the battle is pivoting on who can develop the first mass-produced EV. You're more courageous than I am to hold a trade in a pennant, but I stand by my original analysis that it looks bullish. I wish I could say I've had success trading pennants I thought looked bullish. :D For me it's easier to wait for the breakout and confirmation. I'm personally watching for a pivot between now and Q3. If plants are forced to shut down again due to the pandemic, I suspect that price action will blast through every stop-loss to $5-6.
Jimmynada
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I suspect come Tuesday the rubber meets the road for Nio. I am long!!!