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Tesla Holds Steady as NIO Wavers Despite Strong Deliveries - Chart

NIO hits multi-month highs after better-than-expected monthly deliveries, although shares are now reversing. Here's the trade.

NIO  (NIO) - Get Report shares were wavering on Thursday, giving investors plenty of volatility on the day.

Shares opened higher by about 3%, but quickly sold off and were down about 3% Thursday.

The action comes despite NIO reporting better-than-expected deliveries. NIO delivered just over 8,000 vehicles in June, growing 20.4% sequentially and 116.1% year over year.

General Motors  (GM) - Get Report also reported strong quarterly delivery results.

Tesla’s  (TSLA) - Get Report deliveries are expected north of 200,000 for the quarter. Ahead of the report, Tesla stock price has been incredibly stable over the last five trading sessions. NIO's volatility doesn't seem to be impacting it at all. 

Despite Tesla’s momentum, some are calling for NIO to eventually surpass Tesla as the top EV producer in China.

Clearly there’s momentum in the automotive space. However, that momentum is not being reflected in NIO’s stock price on Thursday. What gives?

Trading NIO

Daily chart of NIO stock.

Daily chart of NIO stock.

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NIO was buried during the recent bear market, falling 54% from peak to its trough in May.

Tesla also corrected hard from the highs - falling 40% - but it was able to avoid new lows in May. NIO was not able to do so, breaking the March low of $31.91.

However, that breakdown was short-lived, with shares bottoming at $30.71 and reversing higher. From there, the stock scorched higher, reclaiming all of its key moving averages and eclipsing $50 this week.

The setup becomes interesting now. Shares closed at the 61.8% retracement on Wednesday and pushed above the $54.20 level on Thursday. The latter has been a notable support and resistance level since the fourth quarter.

That's true today too, as the stock is being rejected from this area. That makes the $50 level vulnerable, followed by the 10-day moving average. I would love a dip to the latter to see how the stock responds.

Below that could put the 21-day and 10-week moving averages in play.

On the upside, keep an eye on $55.13. That’s Thursday’s high. If NIO stock can clear this measure, perhaps the small gap-fill level up at $58.65 is on the table. Above that and perhaps $64 is in play.

That would be quite the run, but when NIO finds its stride it can go on quite the run. 

Keep an eye on $50 on the downside and $55.13 on the upside.