Look out, Tesla, there’s another electric car company in town.
Well, maybe not every “town” in the world – just the ones located in China for now.
Because NIO Inc. (NYSE: NIO), manufacturer of an all-electric Chinese SUV, could be gearing up to make a big move.
The Chinese company raised over $1 billion in its American IPO one year ago, putting Tesla (and other hopeful electric vehicle manufacturers) on notice.
And now, after months of painstaking work, NIO’s starting to roll out its fleet of EVs, including their flagship ES6 – an SUV that saw sales double in August.
Investors weren’t sold on NIO after their IPO, though, and shares ended up plummeting from where the stock opened for trading at. Dropping from $6 to $3.20 over the last year has put NIO in dangerous territory for long-term holders.
However, since bottoming out in mid-June, share prices are starting to recover. Typically, I’d advise against trading such a young company.
But in NIO’s case, the evidence of an uptrend now seems overwhelming, following the news that the U.S. and China scheduled an October meeting to discuss the trade war.
Whether or not the talks actually de-escalate the trade war has yet to be seen. It might not matter, though, as NIO could rise simply on the anticipation of a positive outcome.
In the weekly candlestick chart above, you can see that NIO’s made significant progress since dropping to its all-time low.
A higher low was set just last week relative to the low of mid-June, and the stochastics are reading below 40, which while not ideal, is still serviceable.
What’s really exciting about NIO is the fact that the current weekly candlestick is trading above the last five candle bodies. In fact, it’s even lingering around the high from the last five candlesticks as well.
If resistance at that level can be broken, a major upside breakout certainly seems possible. The next level of key resistance would be the high from early July (at $4.00). After that, a clear path to $6.00 appears visible.
Now, that’s not to say that NIO won’t endure a few selloffs on the way up. Odds are, the stock will repeat the pattern that’s been established over the last few months. Prices will rise, setting higher lows and higher highs, before selling-off slightly – repeating until earnings or a major trade war development.
Which means that with a September 24th earnings report scheduled, we’ve got a good two weeks of trading available. During which, NIO shares could continue rising steadily.
At least, as long as the U.S. and China don’t release another “tariff bomb” before their much anticipated October pow-wow.
