Here’s your trade on NIO, Inc. (NIO). (December 06, 2018)
NIO
In this Free Chart of the Day I want to look at Nio ( NYSE: NIO ). Basically, this is a Chinese Tesla. You can see it’s an IPO; all the lemmings get in, buy at the top, sell at the drop and now you don’t know what the heck to do.
This is kind of tightening up here; this is what we like to see. You can’t really say it’s tight but I would say the low here of $6.00 seems like a pretty reliable low. I would say the high (I am just kind of drawing general lines around 8.00), so the stock is trading now between $6.00 and $8.00, right?
Here’s my trade: Volume was pretty good today; pretty decent not super high, a little bit lower than average. But still, I like the way the stock traded, where it gaps down at the open and then there is nice steady buying in the morning and then it just kind of tapers off, not a whole lot of liquidity and then moving higher into the close. So this is a stock that is actually under accumulation.
For me, I think the trade would be this: You are just starting to get the 50-day moving average, there is nothing really magical about that but traders watch it. And so as long as the stock stays above $7.00 I think you are okay. We are just looking at this as a risk/reward type of thing; so you are risking at a super tight stop at $7.00, we’ll say, you never want to put it right at $7.00 but 37 cents to the downside.
Then what would we look for on the upside? Well, we had two pretty big days of selling, which we like because the stock gapped down this morning and then rallied higher. So I am looking for more of a retracement and I can see this stock coming back up to test at least $8.00 or so, maybe more. This would be a good time to buy Nio ( NYSE: NIO ). And then if the stock starts rallying up above, we’ll call this Tuesday’s intraday high, if it starts running up above, say, 7.60, then you add to that position. Then you really start watching it closely when it gets up above $8.00.
Now, this might not seem like a lot but on a percentage basis it is actually a pretty significant trade so keep that in mind. Liquidity is not your issue the trade is over 16 million shares on a little bit less than average volume. You won’t have a problem with market orders just make sure that you are not trading too big.
Free Chart