NIO is set to report earnings on Wednesday after the close.
So far, it’s been a mixed bag for automakers.
Ford rallied on its earnings report but failed to generate lasting upside momentum. It didn’t help that General Motors fell relatively hard on earnings, shedding about 9%.
For NIO, though, its closest comparison is often Tesla , which is up 8.7% since it reported earnings. Even though it’s up now, Tesla stock didn’t have an easy ride despite strong results.
In fact, Tesla stock fell in its first post-earnings trading session and was still down 1.6% two days later. Only after a few days did bulls start to bid the name higher.
With NIO’s relatively muted price action lately (and struggles across the board for most EV stocks), can bulls expect a similar “delayed rally” from NIO, or should they watch for something else?
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Trading NIO Stock
NIO stock has been surprisingly quiet lately, with the shares continuously chopping around $45. Several key moving averages sit around this area as well, including the 21-day, 50-day and 200-day moving averages.
Pressure in the form of resistance is slight, but now we’re just splitting hairs. What we really need with NIO is clarity.
We either need to see NIO stock rally on the earnings report and turn this “chop zone” into support, or we need it to pull back and turn this area into resistance.
If the shares rally, let’s see whether NIO can clear the $46.50 to $47.50 area. Above that puts $50 back in play, followed by a push up toward the $53 to $54 zone.
In that event, a rally over $47 will hopefully turn this $45 area (and these key moving averages) into support, giving bulls a new uptrend to trade and dips to buy.
If the earnings reaction is lower, keep a close eye on the 21-week and 50-week moving averages.
Investors will want to see these measures hold as support. If they don’t hold, the July low is in play at $38.66, followed by a potential decline into the $34 to $35 area.
Regardless of whether it’s a delayed reaction like we saw with Tesla, keep these levels in mind with NIO when it reports earnings.
This article was originally published by TheStreet.