Bullish momentum and other supportive trends are back in the driver’s seat for Nio (NYSE:NIO). And today it’s time to buy!
Let’s see what’s happening off and on the NIO stock chart, then offer a risk-adjusted determination to steer clear of devastating crashes, while helping drive your trading account towards a photo-finish victory.
The Shanghai-based EV upstart proved one of 2020’s hottest trading vehicles. Shares of Nio finished last year up 1,100%. And from Covid’s darkest days on Wall Street, shares have gained more than 2,160%.
Not bad, right?
The huge returns NIO stock enjoyed weren’t without cause either. Not only was Nio able to ride a broader bullish trend in electric vehicles and hopes for a greener future, but the outfit also consistently over-delivered on actual and well-received products and services making NIO a standout in overseas markets.
And this past week, NIO’s success has continued to motor on.
Jumpstarting the stock’s June’s performance, Nio announced the delivery of 6,711 units in May and marking impressive year-over-year growth of 95%. Moreover, the EV outfit managed the solid gains in a period challenging automakers from Ford (NYSE:F) to Volkswagen (OTCMKTS:VWAGY) due to the systemic semiconductor shortage triggered by Covid-19.
Also a positive, management has pledged to accelerate its June deliveries to shore up the prior month’s delays. And looking further into Q2 NIO expects to deliver 21,000 to 22,000 vehicles and more than double 2020’s same quarter result of 10,331 units.
Can or should NIO investors expect even more? If recent history is any indication, the answer is yes.
Today, with the world’s largest EV market (China) expected to balloon from 1.3 million EVs in 2020 to 6 million by 2025 and whose consumers are increasingly favoring domestic EVs like Nio’s over those of industry giant Tesla (NASDAQ:TSLA), conditions continue to support the bullish trend in Nio.
What’s more, right now and for investors thinking of buying NIO stock, pattern-busting momentum underway on the price chart also points to investors enjoying a great deal more as well.
NIO Stock Daily Price Chart
Source: Charts by TradingView
Corrections, as many EV investors are all-too-aware, happen all the time. And NIO stock hasn’t been an exception to that rule. But following a bearish cycle which took shares from $66.99 in early January to a low of $30.71 five months later, NIO’s character has changed — decidedly for the better.
As the daily price chart reveals, a bullish momentum entry is now available in NIO. Stochastics has signaled a bullish crossover in overbought territory while shares finished at their highest prices since late March on Monday.
Combined with a sturdy-looking corrective double bottom to support a purchase, a move in NIO stock into the right side of the base and eventually a breakout to new record highs has grown increasingly approachable.
For investors agreeable with buying shares I’d recommend an August $45/$60 collar as an alternative and fully-hedged and reduced risk strategy.
Bottom-line, if NIO stock rallies similar to 2020’s rocket ship, the collar stands to make less than a straight-up long position. It’s a potential compromise to be sure. However, given a collar’s ability to adapt over time through adjustments, strategically-placed stock risk of less than 8% and opportunity to profit by nearly three-fold over the spread’s exposure, this collar is anything but optional equipment for investors.
On the date of publication, Chris Tyler has (either directly or indirectly) a long position in Ford Motor Co. (F) and its derivatives. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.