The move comes after a two-fold catalyst. First, JD reported a vastly better-than-expected earnings result. Earnings of 33 cents per share came in 25 cents per share ahead of estimates. Revenue jumped almost 23% year-over-year to $21.9 billion and smashed consensus estimates by nearly $1 billion.
As if that weren't enough of a catalyst, positive trade news regarding delayed tariffs is giving a huge lift to equities. Everything from Apple (AAPL) - Get Report to Nvidia (NVDA) - Get Report is on the move, and Chinese equities are up notably as well.
It's a good day for investors in JD.com, a stock that has really struggled over the past year. Last August, the vital $35 support level gave way before the stock finally put in a double-bottom down near $19.
Let's see where JD stock can go from here.
Trading JD Stock
In late July and early August, JD stock was under tremendous pressure, falling roughly 20% in just a few days. However, the vital $26 level held as support, aided by the 61.8% retracement near $25.50 and the 200-day moving average.
With Tuesday's rally, JD stock is reclaiming both the 50-day and 20-day moving averages. For bulls, they will now want to see these two moving averages act as support going forward. If they do, it increases the odds that JD stock will be able to push through resistance.
Where will those levels come into play? On the chart above, two significant areas stick out to me.
The first is $31.50 to $32. This zone was temporary support in August 2018, but quickly gave way as lower prices were ushered in. This level turned to resistance, as clearly marked throughout Q1 and Q2 of 2019.
Should shares push above this range, the next resistance zone doesn't come into play until ~$35. This was the main breakdown point a year ago, which kickstarted the relentless selling in JD.com.
Between the trade news and earnings, it may be enough of a catalyst to attract new investors. They may look to buy dips into the 50-day and 20-day moving averages so long as they hold as support. Should support fail, it's vital that JD stock holds the 200-day moving average and $26. Otherwise, consider buying on a breakout over $32, looking for a return back to $35.
This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.