NIO stock price got off to a flying start yesterday, and in early trading was up 4%. However, despite impressive sales figures, NIO ended firmly in the red.
NIO (NIO: NYSE) closed at $50.90, down $2.30 (-4.32%).
The early positive price action came as a result of the Chinese EV makers delivery update for June. On balance, the data looked impressive, and the 8,083 deliveries set a new monthly record. Furthermore, June’s sales improved on the same period last year by 116%.
So it seems strange that stock not only gave back the gains but ended the day much lower. I suppose it’s possible that after an 80% rally in six weeks, some longs used the buoyancy to take some money off the table.
Additionally, the ongoing semiconductor supply shortage could pose a problem further down the line for much of the electric vehicle industry. This also contributes to the profit-taking theory.
The daily chart highlights some interesting points. First of all, the 50-day moving average at $43.11 is now above the 100-day at $42.21. Additionally, a strong, although steep, uptrend can be seen from the May low.
Yesterday’s extension did take the NIO stock price deep into overbought territory. The relative strength Indicator (RSI) jumped to 74.40 in the early part of yesterday’s session. However, it has retreated to 65.90, suggesting NIO has worked off the stretched conditions.
I think as long as the price remains above the uptrend at $46.50, the bullish outlook remains intact. I still see a possibility that the price could extend into my target zone between $64.50 and $67.00. However, yesterday’s performance serves as a stark reminder that the stock is prone to volatility.
Furthermore, should NIO lose the trend support at $46.50, I would concede that the bullish outlook has reversed.
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