PreMarket Prep Stock Of The Day: JD.com

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

While the U.S. equity markets are on what seems to be an unstoppable bull run, the same can't be said for Chinese companies listed on U.S. stock exchanges. No matter what, many of these issues are moving lower and lower, even when reporting good earnings.

With that in mind, JD.com JD is the PreMarket Prep Stock Of The day.

The Company: JD.com is China's second-largest e-commerce company after Alibaba in terms of transaction volume, offering a wide selection of authentic products at competitive prices, with speedy and reliable delivery. JD launched its online marketplace business in 2010.

Winning Streak: In March 2020, JD bottomed at $32.70 and actually closed green the month ($40.50 vs. $38.51). That low came in just above its December 2019 low ($30.84). In a remarkable fashion, the issue was higher in the 11 of the next 12 months, with the only outlier being a minuscule decline in September, falling from $78.64 to $77.61.

The issue finally peaked on Feb. 17 at $108.59 and posted its all-time closing high on that day at $106.88.

Losing Streak: Beginning in March the issue has been lower five of the past six months. On a positive note, the issue has a potential double bottom based on the monthly charts. At this time, the low for the move from July ($61.55) has been defended as the issues low for this month stands at $61.78.

Q2 Report: Before the open, the company reported quarterly earnings of $0.45 per share, which beat the analyst consensus estimate of $0.41 by 9.7%. The company reported quarterly sales of $39.30 billion, which beat the analyst consensus estimate of $38.28 billion by 2.6%.

PreMarket Prep Fundamental Take: Dennis Dick said, “I want to be in some Chinese stocks, but it just not been the place to be. I would love to own the company because it is firing on all cylinders, but it is hard to own it because of the political risk.”

PreMarket Prep Technical Take: When the issue was being covered on the show it was trading just under $65. The author of this article noted the potential resistance if the issue continued to move higher.

The importance of clearing and holding Friday’s high ($65.29) was the first hurdle to clear. If that level was breached investors were alerted to the high from last Wednesday ($66.29). For the entire session, ending the day above Wednesday's close ($65.53) would be a win for bulls of the issue.

Price Action: After a higher open, the issue easily surpassed Friday’s high, but found willing sellers one penny above Wednesday's high at $66.23 and sharply reversed course. The ensuing decline found support under Friday’s low ($63) at $62.33 and began to rebound. As of 3 p.m., it's actively trading in the mid $65 handle.

The full discussion on JD.com from Monday’s show can be found here: