Two stocks to watch: NIO and AVGO
By Antreas Themistokleous
24 August 2023
NIO Limited (‘NIO’)
NIO Limited’s (symbol ‘NIO’) share price traded in a sideways channel for the second quarter of the year, incurring around 10% in losses. The company’s earnings report for the fiscal quarter ending June 2023 is set for release on Tuesday 29 August, before markets open. The consensus EPS is $-0.36, compared to $-0.25 in the same quarter last year.
With a bad history surrounding dividend payments the company’s share doesn’t exactly look like a very attractive addition to investors’ portfolios, but the chart shows good setups for some short-term trades.
The negative EPS on the other hand discourages any long-term holding of the share, at least for the time being.
On the technical side, the price has dropped aggressively since early August, finding sufficient support around the $10.50 area, which consists of the lower of the Bollinger bands and 61.8% of the daily Fibonacci retracement level. Currently, the 50-day moving average is trading above the 100-day. This indicates the bullish momentum is still valid, but might change in later sessions if the more recent pullback is taken more into account. On the other hand, the aggressive correction has pushed the Stochastic oscillator into extreme oversold levels, possibly pointing towards a correction to the upside in the near short term,
All in all, $10 and $11.60 are the strong technical support and resistance areas respectively, since they are the 78.6% and 50% of the daily Fibonacci retracement levels.
Broadcom Inc.’s (AVGO) share price has made profits of around 15%, trading in a steady uptrend throughout the whole of the second quarter of the year. The company’s earnings report for the fiscal quarter ending July 2023 is to be released on Thursday 31 August, after markets close. The consensus EPS is $9.42 compared to $9.07 in the same quarter last year.
The recent share uptick was due mainly to UK regulators’ approval of Broadcom’s $69 billion acquisition of VMware. This will enable the company to accelerate its adoption of cloud technologies, while giving financial resource and capability to fund its research and development ambitions.
Its financial outlook is also looking healthy, since its current ratio as of 30 April this year was at 1.74, while the debt is at its lowest since January 2020.
From technical analysis, the price had been falling slightly, but recent news of the acquisition going through has pushed the latest session up by almost 5% at the time of writing. It is now facing the resistance of the 20 and 50-day moving averages while the Stochastic oscillator has been pushed back into ‘neutral’ levels, indicating that the price could move in either direction in the short term . The 50-day moving average is still trading well above the 100-day, validating the overall bullish momentum shown on the chart. Whilst the level of $800 seems to be the strong technical support area, which consists of the 38.2% of the daily Fibonacci retracement level, as well as the psychological support of the round number.
This is not investment advice. Past performance is not an indication of future results. Your capital is at risk, please trade responsibly.
Antreas Themistokleous is a trading specialist in Exness. He is a Certified Financial Technician since 2018. As a member of the Society of Technical Analysts, Antreas is implementing advanced use of indicators and patterns to conclude in an action plan for different trading strategies.
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