JD.com: When “Bullish Fundamentals” Mean Exactly Squat
Here is the real reason for JD's August rally to all-time highs
by Nico Isaac
Updated: September 08, 2020
As China's largest online retailer, JD.com is rapidly becoming known as the Amazon of the East. Unfortunately, as a tradeable stock on the NASDAQ, JD often lives up to its name "Jingdong," which means "to alarm or startle" -- by catching investors by surprise with sudden, unforeseen moves.
Take the stock's recent performance. This chart of JD shows that, after trading sideways throughout all of July and into August, price broke out to the upside in a 23% rally to all-time highs on September 2.
According to the mainstream experts, JD's rally was sparked by two shockingly positive performance reports, released on August 13 and 17, which caught analysts off-guard:
Wrote one August 13 Business Insider "JD.com Soars After Reporting Surprise Profit."
Another August 19 Seeking Alpha described JD's 34% increase in year-over-year revenue as "astonishing results without blemishes."
And a third August 17 Yahoo! Finance told of the company's "better-than-expected" quarterly sales, its fastest quarterly gain since 2018.
But the fact is, while many didn't see JD's supposed news-fueled rally coming until after it happened, the bull thesis on JD.com was confirmed long BEFORE the news.
More so, its subsequent rally to record highs wasn't caused by fundamentals, as astonishingly unblemished as they were. It was driven by the stock's Elliott wave pattern, which foresaw a record-breaking surge days before the "bullish" news -- on August 5.
Here, in our August 5 Trader's Classroom, editor Jeffrey Kennedy presented this wave labeled chart of JD. It identified the July consolidation as a wave 4 of a 5-wave impulse underway since March.
This set the stage for a powerful wave 5 rally to $74-$79 per share.
The stock's subsequent 23% rally to record highs in August followed on cue -- before its fundamental backdrop was hit with several "bullish surprises."
When it comes to identifying high-confidence setups in the world's most heavily watched ticker symbols, the key is anticipation -- not affirmation of trend changes after the fact.
Find out what stocks are on Trader's Classroom's "watchlist" today, so you can be one step ahead of the changes to come tomorrow.
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