Preview of the week (28Aug2023) - is NIO a good EV buy?
Public Holidays
No public holidays for Hong Kong, the US & China in the coming week.
On the 1st of September 2023, Singapore declared a public holiday as the nation goes to vote for a new president.
Economic Calendar (28Aug2023)
Notable Highlights
PCE price index. The Core PCE index (YoY & MoM) should be the most important economic data for the coming week. This is the preferred reference of inflation for the US Fed and will be an important reference for the coming interest rate decision in September 2023.
Consumer Confidence - This can be an important watermark coming to consumption.
Home Sales. This will be a good reference for the home and housing market. Several have spoken about a crash but the high interest rates have led to lower transactions.
GDP Q2 data - An update will be provided for the Q2 GDP of the USA.
PMI. China updates with manufacturing PMI. As the world’s factory, this can be a good forecast for global consumption. The US will share similar data in ISM Manufacturing PMI and ISM Manufacturing prices. These are good references USA manufacturing sector - whether it contracts or grows.
Jobless claims. Initial jobless claims will be announced on Thursday. This would form critical data points for the Fed to decide on the next interest rate adjustment. This is part of the data consideration for the Fed in their coming interest rate decision. The unemployment rate will also be released in the coming week, another important reference for the Fed.
Jobs & Payroll related. JOLTs Jobs openings will reveal the number of job openings, a barometer of the job market in the USA.
Crude Oil Inventories can be seen as forward indicators of market demand and consumption. If the trend of excess inventories continues, this implies demand erosion that can lead to reduced production & weakening consumer spending.
Earnings Calendar (28 Aug 2023) - is NIO a good EV buy?
This is another week of earnings with some of the ones with personal interests in the likes of NIO, HP, Salesforce and UBS.
Now, let us look at NIO, one of the rising EV stars from China.
Performance of NIO
Personally, I have already sold out my positions in NIO years back. Despite rising annual revenue, there has been no operating profit as the company continues to suffer losses since 2016. Losses in 2022 have surged to over $2.243B from the region of $706 in 2020 and 2021.
As such, I prefer to monitor the business and hope to see them achieving profits soon.
NIO has fallen by over 45% from a year ago. The last price of $10.83 (as of 25 Aug 2023) is above the 52-week low of 7 but remains a distance from the 52-week high of 22.74.
For the coming earnings, Investing has a forecast of -2.96 and 9.16B for its EPS and revenue respectively. We should note that Investing’s forecast is expecting a bigger EPS loss and a drop of over $2.8B in revenue compared to the previous quarter. For the EPS, it is expected to be the biggest EPS loss in recent quarters. This is not trending in the right direction. Personally, I would prefer to monitor instead of investing in NIO.
Market Outlook - 28 Aug 2023
From the chart above, we should note that the volume of S&P500 at 1.97B is much lower than the average trading volume of 3.98B. This is a loss of strength for the current trend.
Technical observations of the S&P500 1D chart:
The Stochastic indicator is on an uptrend. There is a potential crossover (for a reversal) but there is no confirmation as the crossover is yet completed.
The MACD indicator is on a downtrend but a bottom crossover looks to take place soon. It is possible for MACD to range sideways along the bottom too. Let us monitor.
Moving Averages (MA). Both MA50 & MA200 lines are on an uptrend. With the last candle being below the MA50 line and above the MA200 line, this can be interpreted as a downtrend in the mid-term and an uptrend in the long term.
Exponential Moving Averages (EMA). All 3 EMA lines have converged and are at a current downtrend. The EMA lines are spreading downwards in a fan-like spread. The EMA lines need to converge for the current downtrend to reverse. There is a chance for a reversal of the current trend as the EMA lines look to be spreading sideways.
From the 1D technical indicators above, there are a total of 7 (Buy), 16 (Sell) and 0 (Neutral). Investing recommends a “SELL” based on the technical indicators above (1D chart for S&P500). It is possible that we may see a downtrend as implied by MACD.
My thoughts
The various indicators point to a downtrend in the coming week though a short rally is possible.
@TigerStars
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