This article is for education purposes only, and not to be taken as advice to buy/sell. Please do your own due diligence before committing to any trade/investment.
When was the last time you’ve heard anyone talk about Chinese stocks excitedly?
It’s not surprising especially when 2023 was yet another poor-performing year.
As the Chinese stock market continues to slide, are there position trading opportunities that you can seize?
Today, let’s check out JD.com for such an opportunity.
Brief History of JD.com
Source: corporate.jd.com
JD.com is China’s largest online and overall retailer. But it didn’t start this way in 1998.
The company began as a media store selling VCDs and DVDs. It wasn’t long when the company moved online.
Right through the Great Financial Crisis, JD.com dug in to build a modern logistics network, becoming a full-fledged e-commerce company.
Through strategic partnerships and acquisitions, JD.com morphed into the e-commerce giant we are all familiar with.
How has its business been doing lately?
Let’s explore this in the next segment.
Business Model and Financials
To know if JD.com’s business has been performing, let’s have a look at its total revenue (in blue) and net income (in yellow).
It’s obvious that its total revenue has been growing every year since 2016.
Can the same be said for its net revenue?
Unfortunately, no.
Its net revenue has been erratic and inconsistent.
These 2 words are not well-received by investors and traders.
Hence, I don’t have high expectations for its share performance.
What about allowing the market to tell us its thoughts about JD.com’s shares?
Technical Analysis on JD.com (NASDAQ: JD)
Reading the trend of its share price is easy.
You can do so by comparing the number of red (solid and outlined) candles to those in blue (solid and outlined). When there are more red candles, the stock is in a downtrend.
Ok, there are a lot more red candles than blue, so you’ll want to be on the lookout for shorting opportunities.
And you don’t need any form of technical tools (not even support and resistance) to determine whether the time to short its shares is here.
What you actually need are the 2 main indicators on the chart – the red/green arrow, and the Trend Impulse Factor.
Do you see a red arrow above the latest candle of JD.com?
The red arrow can be likened to a Sell signal. However, it works better when paired with the Trend Impulse Factor.
What about this Trend Impulse Factor indicator, you ask?
You’ll want the bar of the Trend Impulse Factor indicator to be dark green in color when the red arrow is out.
This tells you that there’s bearish momentum, and it’s likely to last. Then, you’ll enjoy a higher chance of profiting from this stock.
So, should you be shorting the shares of JD.com now?
Not yet.
It’s a good idea to keep this stock in your watchlist and wait for both indicators to agree.
And, the outlook for JD.com’s shares is really that gloomy.
Conclusion
Source: corporate.jd.com/ourBusiness#jdLogistics
JD.com was founded from humble beginnings. Through foresight and good business acumen, its business model evolved to become the giant it is.
A look at its financials reveals the reason this stock is being shunned by many.
Its price chart, with our proprietary indicators, suggests that the time to short its shares for a position trade isn’t here just yet.
Both the arrow and Trend Impulse Factor indicator have been tested and proven. They form the TradersGPS (TGPS) system to help you decipher if a stock is ripe for a position trade. You won’t have to feel in the dark and make wild guesses.
It’ll be a good idea to save this stock in your watchlist and monitor it over the next few weeks.
