Surprisingly, considering Friday’s massive market selloff, six stocks in the NASDAQ 100 Index Report managed to close in the green, four of which were Chinese internet stocks and the strongest of which was Pinduoduo (PDD) with a 13.5% gain. This move helped the shares to climb 58 positions on Friday to 38th place, leaving the red zone for the first time since January and reaching their highest position in the Yellow Neutral Zone since March of 2021. Friday’s jump also enabled the shares to break out of a long-term relative strength downtrend.
Pinduoduo (PDD) shares appear to be turning the corner. It appears that a year-long downtrend finally bottomed out in March in a big selling climax and final flush of weak hands when the shares gapped down for a couple of days and then gapped back up all on massive volume for the stock, which looks like a textbook bullish Island Bottom.
An initial rebound was contained by the 50-day average, but the subsequent correction found support at a higher low and on Friday the shares gapped back up through $40.00 and closed above their 50-day average for the first time since February, both encouraging signs. Downtrend lines suggest next potential upside resistance may appear near the $50.00 or $60.00 round numbers, with $40.00 becoming initial support.
A long-term downtrend in Pinduoduo (PDD) shares that started above the $200.00 level appears to have finally bottomed out in March when support came in near the $25.00 level. Since then, the shares have started to bounce back, with an initial correction bottoming out at a higher level.
At this point, base building appears to be underway with a breakout over the recent high near the $50.00 round number needed to confirm the start of a new uptrend with next potential resistance near $59.75 and then $67.25. Initial support appears near $39.40 based on a 3-box reversal.
PDD’s SMAX score increased to 5 on Friday, showing improvement but still exhibiting weakness relative to the asset classes. It would need to climb one more point to turn bullish.
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