Can JD Rotate Back to Highs and Hit $100?

JD.com stock is trading well as the company is mulling whether to spin off a business. Can the stock spin higher?
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JD.com  (JD) - Get Report is up 2% on Wednesday, gapping up to one-month highs.

The stock is rallying on reports that the company is considering spinning off its cloud and AI business.

JD has been looking at ways to increase shareholder value. Most recently, the company’s JD Health unit raised $3.5 billion in an IPO listed in Hong Kong.

Further, its logistics unit has been in discussions for an IPO as well. Throw in a spinoff of its cloud and AI unit and JD.com will continue to create value, even if the spinoff tactic is different from what investors are used to seeing out of tech.

It would leave JD.com primarily with its e-commerce platform, the second-largest in China behind Alibaba  (BABA) - Get Report.

With Alibaba struggling with some regulatory hurdles, perhaps that’s only adding to JD’s desire to pare down its businesses. Let’s look at the charts.

Trading JD Stock

Weekly chart of JD stock.

Weekly chart of JD stock.

Zooming out, I found JD.com’s monthly chart remarkable. 

The stock’s only down month this year came in September, when it lost just over 1%. JD stock has now rallied in 13 of the past 14 months, more than tripling in that stretch.

We’re seeing a nice rotation that actually started to take place last week.

That’s when JD stock gave the bulls a weekly up rotation, clearing last week’s high -- which came on a doji candle -- after a test of the 21-week moving average. Further, the shares reclaimed the 10-week moving average in the process.

But the stock has been volatile, again retesting the 21-week moving average and reclaiming the 10-week moving average this week. Now going weekly-up again over $87.62, JD stock looks as if it may want to push higher.

Here’s what I want to see now: JD stock needs to maintain above last week’s high. If it can do that, $90-plus is possible. I am looking for the stock to retest the November highs near $92.75.

Above puts the 161.8% extension in play near $95.75, followed by a push to the psychologically key level of $100 and the two-times range extension near $101.50.

On the downside, the must-hold levels are pretty clear. The 21-week moving average has been key support over the past three weeks, as has $80. Below the December low at $79.07 and a larger correction may occur.