NIO Stock News and Forecast: Jumps 7% to test the $36 mark

• NIO stock was one of retail traders favourite toys in 2021.
• The stock seemed to lose interest as it was caught up in the China sell-off.
• EV stocks are still ones to watch and a growth sector.

Update October 8: NIO opened Thursday with a bullish gap and rebounded to test multi-day tops at $36, before settling the day 7% higher at $34.91. The main catalyst behind the surge in NIO shares was Goldman Sachs upgrading its rating on NIO to Buy from Hold, citing that the stock price could explode 66% from current levels to reach their target of $56 per share. The broader market optimism amid progress on the US debt ceiling issue and easing energy crisis collaborated to the upswing in NIO stock price.

Are you reading this and thinking, "Oh yeah, I remember when I used to trade that name"? If so, you are not alone as NIO stock lost a huge following as it steadily slid lower once the Chinese tech crunch came into effect with numerous former favourite tech names taking a serious move lower. The increased regulatory scrutiny that began last year with the failed spin-off of Alibaba's (BABA) ANT Group IPO then spread to other areas as Chinese leaders became increasingly concerned by the burgeoning tech industry and the huge amounts of data created and stored by Chinese tech companies. The crackdown spread to DIDI and other Chinese names, and eventually, investors lost interest and exited most. NIO only as recently as July was trading at $55. Now it is at $33. 

For those of you not familiar with the stock, NIO is an electric vehicle manufacturer from China. The company makes and sells smart connected vehicles and competes against the likes of fellow Chinese manufacturers Xpeng (XPEV) and Li Auto. The main NIO vehicle is the signature ES8, which is a seven-seater electric SUV with a range of up to 500 kilometres on a single charge. NIO also provides vehicle charging solutions.

NIO stock news

The latest delivery data from NIO was again demonstrative of strong growth. Q3 to the end of September 2021 saw a delivery increase of over 100% on the previous year. Nicholas Colas of DataTrek Research had a note out last week, which Reuters picked up on, looking at the Chinese electric vehicle market. The report said the country remains on track to reach 25% of all vehicle sales being electric by 2025. China is well ahead of the US and Europe in terms of electric vehicle infrastructure and believes China is on track "to disrupt the European and US markets just like Japan did with small cars in the 1970s and 1980s." EV makers are likely to see renewed interest as Rivian prepares for its IPO. 

NIO stock forecast

The trend clearly from the daily chart below is bearish with a series of lower lows and highs, but what we are trying to do is anticipate a turnaround. This is a dangerous proposition as "the trend is your friend" is a favourite market saying. We have witnessed the broad market turnaround sharply on Wednesday, however, with the US debt ceiling problems perhaps solved. If risk comes back into the market, then Chinese tech names could see a bounce and as mentioned the EV space is about to get some renewed interest with the Rivian IPO.

NIO has nearly retraced back to the support zone from the middle of May. This is just above $30 and saw a strong rally all the way to $54. What we need is a signal for this turnaround and the Relative Strength Index (RSI) breaking the downward trending line would be one or NIO staging a strong move above the 9-day moving average and closing above it would be another. We can see from the moving average that volume has been diminishing, so this may be a sign that the bears are losing interest and the price may be stabilising. 

FXStreet View: Bearish but look out for a turnaround. Neutral above $35, bullish above $40.

FXStreet Idea: Buy a breakout or strong move with confirmation from the RSI or a volume spike.

Previous updates

Update: NIO was firmly up on Thursday, adding roughly 7% to close the day at $36.01 per share. US indexes posted substantial gains, although give up some ground ahead of the close. Nevertheless, markets rallied on relief following news that US Senate majority leader Chuck Schumer announced an agreement on extending the debt ceiling by $408 billion until early December. The NYSE Composite finished the day 174 points higher, adding 1.07%.