Does a New Bull Market Lie Ahead in NIO Stock?

Advertisement

Nio (NYSE:NIO) started the week with a rally. But is it truly time to put NIO stock’s bear market in the rearview mirror?

A Nio (NIO) sign and logo on a tan concrete building.

Source: Sundry Photography / Shutterstock.com

Today, let’s check in with NIO off and on the price chart, then offer a risk-adjusted determination aligned with those findings.

Following a massive rebound late last week, which staved off a newly minted bear market in the large-cap technology heavy Nasdaq, nail biting geopolitical theater has returned to the fold on Wall Street.

The bellwether finished flat in a volatile session as Russia’s invasion of Ukraine finds investors rethinking some the index’s near 9% rally off last Thursday morning’s brief, but crippling plunge.

But large cap, tech outfit NIO auspiciously bucked the jittery action with shares adding almost 9% by Monday’s closing bell.

Not that Nio is alone in its bullish wherewithal. Peer, competitor and the world’s largest EV manufacturer Tesla (NASDAQ:TSLA) finished with a gain of 7%.

However, unlike many instances where a so-called Tesla halo effect is responsible for inciting a shorter-term rally in NIO stock, Monday’s traction is purely coincidental as Nio has company-specific news which is benefitting shares.

Amid ongoing worries of a NYSE delisting tied to broader east versus west politics, the Chinese EV outfit announced its Class A ordinary shares will remain in the U.S., but also trade as a secondary listing in Hong Kong by way of “introduction.”

The NIO stock listing is expected to begin trading on March 10. That’s a full year since the initial application.

Regulatory concerns about Nio’s business structure turned the filing into an unexpectedly lengthy legal ordeal that has weighed on shares.

Also a positive, with this route not involving the sale of shares or the need to raise capital and acting as a hedge against being delisted, a relief rally that some NIO stock investors can call their own is now underway.

NIO Stock Monthly Price Chart

Nio (NIO) hammer style monthly doji formed off volatile support zone in NIO stock's 13 month long bear market
Source: Charts by TradingView

All stocks correct. Even the best of the best go through bearish cycles which regularly precede new all-time-highs.

Just ask Tesla shareholders about last year’s fourth-quarter breakout to all-time-highs out of a nine-month long corrective cup-shaped base.

And for the better part of the last 13 months, NIO stock has been down that well-worn road.

But as we say goodbye to February, Nio investors have a couple very strong reasons to see a very healthy “good buy” in Nio with March now on the calendar.

As Nio’s lifetime monthly price chart reveals, the stock’s corrective move of 72% off last January’s all-time-high of $66.99 has finished the month in a bullish-looking hammer doji candlestick.

What’s more, the monthly bottoming candle appears to be successfully challenging a previously detailed key price zone from roughly $13.50 – $19 consisting of Bollinger, pattern and Fibonacci supports.

For the moment, bullish investors may simply want to put NIO stock on the radar for a purchase. A classic candlestick entry would occur if shares can trade above February’s pattern high of $26.41.

I’d also suggest waiting on Nio’s monthly stochastics before buying shares.

Given the larger size of the candlestick and its low that remains well-above the $13.50 low of the support band, a bullish crossover should help improve the odds for a more meaningful bottom.

Should those conditions be met, and investors want to avoid larger downside exposure, while participating in potential upside profits, a shorter, intermediate-term bull call spread might be considered.

One favored combination right now that should continue to look equally good off and on the price chart in the days ahead is the May $30/$35 bull call spread.

On the date of publication, Chris Tyler did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.


Article printed from InvestorPlace Media, https://investorplace.com/2022/03/does-a-new-bull-market-lie-ahead-in-nio-stock/.

©2024 InvestorPlace Media, LLC