NIO Stock News and Forecast: Why is NIO down? Test of $46.89 resistance fails to charge it up
- NIO stock drops as resistance once again bites.
- EV manufacturer could see further pressure as Chinese stocks once again fall.
- NIO shareholders will keep a close eye on TSLA results after the close.
NIO shares have been suffering of late as Chinese stocks see repeated headwinds and the electric vehicle (EV) sector is on hold until Tesla releases results after the close on Monday.
NIO stock suffered a backlash from the DIDI fallout (see here) and retraced to the 200-day moving average. The sell-off was also technical in nature as the stock had failed to break the $54.89 resistance. NIO then retraced and briefly broke the 200-day moving average but bounced quickly from the 100-day just below. FXStreet had identified this support zone – "NIO will then have a last chance at the 100-day moving average, currently at $41.24" – and this has played out nicely.
Now, though, once again there is a Chinese fallout, this time from the education and real estate sectors with the Hang Seng suffering a 4% hammering overnight. While you may argue that NIO is not affected by these sectors, the investor community is becoming tired of the constant uncertainty and dumping of many unrelated Chinese stocks. Remember you can plan around good news or bad news but you cannot plan around uncertainty. Markets hate uncertainty more than bad news.
Unfortunately, NIO is showing that to be exactly the case as it falls nearly 3% straight from the bell on Monday. Recovering impressively at the time of writing to be flat on the day.
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NIO statistics
| Market Cap | $69 billion |
| Price/Earnings | -83 last 12 months |
| Price/Sales | 25 |
| Price/Book | 19 |
| Enterprise Value | $56 billion |
| Gross Margin | 16% |
| Net Margin |
NA |
| Average Wall Street Rating and Price Target | Buy $55.64 |
NIO stock forecast
This one has proven tricky of late with some wild swings based on the news in relation to Chinese regulation. While FXStreet called the bounce from the 100-day support correctly we did not see this recent sell-off coming. NIO is now back below the short-term moving averages and is sideways. The low from July 19 becomes more important, $40.48, as breaking this puts a new low in place and we all know what a lower low and lower highs mean (a downtrend just in case you missed trading 101). This $40.48 will also be the level of the 100-day moving average which stopped the rot previously.
Breaking $40.48 brings $33 as our next support zone to try as this is where the recent run took off from. But use a stop as we are not too confident in this level based on the light volume here. Our preference is the zone at $27 as the volume is greater here.
Given the whole uncertainty around Chinese stocks right now please have a stop in place to control your risk.
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Author
Ivan Brian
FXStreet
Ivan Brian started his career with AIB Bank in corporate finance and then worked for seven years at Baxter. He started as a macro analyst before becoming Head of Research and then CFO.
