Skip to main content

At a time when China and the U.S. are trying to salvage a trade deal, one might find it surprising that Chinese equities were trading higher Friday. Leading the charge was (JD) , which rose around 5% to $29 in midday trading Friday -- and closed up 2.4% to $28.17.

The company reported earnings on Friday, with both earnings and revenue coming in ahead of expectations. Sales grew 20.9% year over year, active customer accounts posted positive growth and operating margins increased. The company also renewed a platform agreement with Tencent (TCEHY) , giving investors a few catalysts to be excited about the future. 

Overall it was a solid quarter, which is obvious given that the stock is still holding most of its gains while the S&P 500 is down about 1% on the day and the Nasdaq is down even more. E-commerce names have been doing well until the recent selloff this week. Names like  (AMZN) and Alibaba (BABA) had been strong and investors are looking at this group to lead the rebound if there's a trade deal in place.

After these earnings results though, they will also expect stock to join in the rally should we get a deal. If that's the case, it's worth asking if is finally set to break out.

Amazon is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells AMZN? Learn more now.

Trading Stock

Weekly chart of stock.
Scroll to Continue

TheStreet Recommends

When looking at the charts, stock looks resilient and desperate all at the same time. Resilient in the fact that it's bounced so far off its lows near $26 (which actually came on a test of its 200-day moving average), but desperate as it clings to its major weekly moving averages.

For now, the stock is holding up above the 10-week and 50-week moving averages. However, shares are stuck below the 38.2% Fibonacci retracement for the 52-week range. That's not the important breakout spot to watch though, which actually sits a bit a higher near $31.

This breakout level is the backside of prior downtrend support. This level was in place for about a year, slowly guiding JD stock lower until it fell apart in third quarter of 2018. At the time, shares were trading for about $33 apiece, below $36 support, and ultimately plunged to $19.21 once downtrend support gave way. This $14 drumming is exactly why we pay attention to the charts and map out stocks with technical analysis.

In any regard, this level is now back in the picture with stock about $2 below it. If it can reclaim it, perhaps it will ignite an eventual return to $36. There will be bumps and bruises along the way, but it's an important starting point.

On the downside, a close below $28 is concerning. Not that it will be a huge loss from current levels, but that it opens the door to a return to $26. And if $26 doesn't hold, a dip down to the $20 to $22 area is in the cards.

The bottom line: look for a breakout over $31 to $32 or a break below $28.

This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.