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Li Auto and NIO Stocks: Time to Breakout and Shine?

Li Auto and NIO are rallying on better-than-expected monthly delivery results. Here's how to trade them now.

NIO  (NIO) - Get NIO Inc. (China) Report and Li Auto  (LI) - Get Li Auto Report are trading higher on Wednesday after the two companies released their monthly delivery reports.

Both companies delivered strong results.

NIO delivered 10,878 vehicles in November 2021, up 105.6% year over year. Li Auto reported 3,485 vehicle deliveries in the month, a 190.2% year-over-year increase.

While both stocks are off the session high, investors are wondering if this report is what it will take to get these stocks moving significantly higher.

After all, Tesla  (TSLA) - Get Tesla Inc Report, Ford  (F) - Get Ford Motor Company Report and others have been enjoying a strong run lately. Is it time for these stocks to rally too?

Trading Li Auto Stock

Daily chart of Li Auto stock.

Daily chart of Li Auto stock.

Li Auto has actually been trading pretty well, but when compared to some of the auto stocks above — like Tesla and Ford — or compared to where it was in the past year, bulls are still yearning for more gains.

Shares are higher in six of the past seven sessions and recently cleared the 61.8% retracement.

Today’s move was enough to send Li Auto to new 2021 highs, albeit, only briefly.

The task at hand is now relatively straightforward.

I want to see bulls keep Li Auto stock over the 61.8% retracement and the 10-day moving average. If the stock can do that, more highs may be on the way.

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Above $37.19 and the 78.6% retracement up near $40 is in play. Above that could open the door to the all-time high.

Trading NIO Stock

Daily chart of NIO stock.

Daily chart of NIO stock.

NIO stock is similar in that it’s well off the one-year high, but different in that it hasn’t been trading that well lately.

However, some are starting to wonder if NIO stock is poised to rally.

The stock has had some volatility around it lately with news of its European production plans, but even before this month, it has been a dicey run over the last few quarters.

Shares remain trapped below many key moving averages. However, if NIO can find some momentum and clear downtrend resistance (blue line), it puts the 50-week moving average and $44 level in play.

The 50-week has been resistance while $44 is our rotation point. Over $44 could put the $46 to $47.50 area on the table, but the more closely watched level will be $50.

Above $50 and the 61.8% retracement near $53 will be in play, then $55. 

Let’s not get ahead of ourselves, though. First we need to see $44-plus.

On the downside, a close below last month’s low at $37.45 could put the weekly VWAP measure on tap. 

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