NIO Stock News and Forecast: XPeng (XPEV) Hong Kong listing helps NIO to recover

Update 2: NIO shares continued to make progress on Wednesday with the Chinese electric vehicle maker up nearly 4% with just over one hour left in the session. Tuesdays high needs to be retaken ($46.55) to register a bullish engulfing candle. Otherwise it looks like being an inside candle with resulting indecision. So we wiat for further clarity which will hopefully arrive on Thursday.

Update: NIO shares bounced on Wednesday as the sector got a boost from XPeng (XPEV). The NIO electric vehicle peer is due to list on the Hong Kong exchange and was up nearly 5% on Wednesday. NIO had suffered on Tuesday but Wednesdays sees a retracement to the 9-day moving average. Tuesdays high needs to be retaken at $46.55 to push the move on. 

NIO shares got stuck in reverse on Tuesday as the stock dropped $5 to close at $44.10. Not too unexpected though as NIO stock has had a decent rally from the $30 low set in mid-May. The rally caught the eye of Citibank, who saw 50% upside for the stock in their most recent upgrade. NIO was charged up and ready for a drive higher on the back of some strong data in early June. Delivery data was strong, and Citi said "expect NIO's monthly new order volumes in May-Jun[e] to be 20-30% higher than the average monthly level in 4Q20 peak season." LiAuto (LI) chimed in with its own strong numbers as deliveries of the company's Li ONE model rose by 101% YoY. Xpeng (XPEV) CEO Brian Gu said, “We are on track to meet or exceed second-quarter delivery numbers, which I think means Chinese EV demand is still very strong.” All in all, there is plenty of positive news flow for the Chinese electric vehicle sector.

All good things come to an end, however, and so it was for NIO on Tuesday. The biggest down day in over a month. Now is this a mere correction or the start of something more bearish?

NIO statistics

Market Cap	$72.9 billion
Enterprise Value	$56 billion
Price/Earnings (P/E)	-137
Price/Book	17
Price/Sales	23.5
Gross Margin	15%
Net Margin	-36%
EBITDA	-4.6 b Yuan
Average analyst recommendation and price target	Buy $52.89

NIO stock forecast

Tuesday's price action saw NIO stock lose the 9-day moving average, a key level for short-term traders. As can clearly be seen from the chart below, this had been holding the price trend from the crossover in late May and guided traders to stay on the long side and ride the trend higher. Now NIO has broken the support, putting the trend in doubt. The move was actually hinted at by Friday's red candle, the initial early Friday promise diminished with a low close, giving a sign for a possible reversal. Traders should have been on heightened alert then on Monday and straight from the open NIO shares looked bearish, not even attempting to look at Friday's highs. So for now we have a new series of lower lows and highs and have broken the 9-day moving average. What does that tell us? Well, it is a beginner downtrend, so we need to see how it plays out. Tuesday's price action and point of control were to the low of the range, adding to the new bearish sentiment. The 100-day and 21-day moving averages converge at $42.97, so this is the next level to watch. A break confirms the new bearish trend is gaining strength. Below that the 200-day moving average sits at $40.78. 

Look carefully at Wednesday's candle for further clues. Taking out Tuesday's highs would mean the bullish trend is back on. Otherwise, the levels mentioned above should be the targets. Traders should prefer to enter longs at the 200-day MA, but every trader is different. Being aware of the key levels is necessary for managing risk.

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