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.
China has opened its borders for almost half a year now.
While the reopening effect has a positive impact on China and the world, not all stocks are buoyed by its reopening.
Let’s find out if this Chinese stock that’s listed on the US stock market, JD.com, is worth a position trade.
Brief History of JD.com
Source: global.jd.com
Founded in 2006, JD.com was known as 360buy Jingdong before changing its name in 2014.
JD.com has morphed from an online marketplace into a logistics, real estate, and digital solutions company.
This sounds great!
Is its financials healthy?
Let’s check it out.
Business Model and Financials
Source: tradingview.com
To know if JD.com is healthy financially, let’s have a look at its total revenue (in blue) and net income (in orange).
At a glance, you can tell that its total revenue has been growing every year.
This is a positive sign as it shows growth.
However, growth isn’t everything.
A company has to be profitable to remain in business for the mid to long term.
JD.com’s net income has been inconsistent – rising in 2017, and dropping drastically in 2018, rising again in 2019 and 2020, before taking a hit in 2021, and rising again in 2022.
Such inconsistency isn’t ideal, and it shows weakness.
What does the market think of this weakness?
The answer lies in looking at its price chart.
Technical Analysis on JD.com (NASDAQ: JD)
Looking at the price chart of JD.com, you can tell that it’s in a clear downtrend.
This can be inferred from the number of red vs blue (solid and outlined) candles.
Without the need of any other technical drawings and tools, you can trade off this chart.
Why is it so?
The 2 main indicators on the chart have been carefully formulated, tried and tested. They are the red/green arrow and Trend Impulse Factor indicator.
Since this stock is in a downtrend, you’ll want to look for shorting opportunities.
To know if the time for shorting is ripe, you’ll want to see a red arrow appear above its latest candle, and the bar of its Trend Impulse Factor indicator dark green in color.
On the chart of JD.com, you can see a red arrow above its latest candle.
However, the bar of its Trend Impulse Factor isn’t dark green yet.
This means that although its share price has been falling, it’s not ripe for a shorting opportunity just yet.
Conclusion
Source: pexels.com
The reopening of China hasn’t greatly benefitted JD.com as of yet. Will it stand to benefit in time to come?
Looking at its financials and price chart, the market doesn’t seem that interested in its shares.
And the time to short its shares isn’t here yet as the 2 main indicators aren’t out simultaneously. Give it some time and an opportunity could come.
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.
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