A Pinduoduo Predicament Appears on the Charts

Pinduoduo Inc. PDD reported an adjusted earnings per share equivalent of $3.20, which beat by $0.41 and revenue of $13.36 billion, which missed by $610 million. Pinduoduo Inc. is a Chinese online retailer with a focus on the traditional agriculture industry. Let's go to the chars and indicators for some guidance. 

In this daily bar chart of PDD, below, I can see that prices gapped sharply lower on Monday. 

Prices gapped below the rising 200-day moving average line and below the lows of March, April and August. Ouch. Prices closed near the lows of the day, so traders probably did not see this decline as a buying opportunity. The daily On-Balance-Volume (OBV) line turned lower and trading volume was heavy on Monday. The Moving Average Convergence Divergence (MACD) oscillator is close to moving below the zero-line for an outright-sell signal. 

In this weekly Japanese candlestick chart of PDD, below, I see a weak picture. Prices gapped below the 40-week moving average line in dramatic fashion. The chart suggests that prices could retest the $80-$60 area, which most chart readers would suggest is support. 

The weekly OBV line has weakened since January. The MACD oscillator has been weakening since the beginning of 2024 and that tells us that the trend strength has been weakening. 

In this daily Point and Figure chart of PDD, below, I see the decline of Monday with the price gap filled in. Here the software suggests a price target in the $41 area. 

In this weekly Point and Figure chart of PDD, below, I can see a price target of $39 being projected. 

Bottom line strategy: You are starting to see a number of market watchers who have their doubts about the Chinese economy and Chinese stocks. For now, these warnings are relatively quiet, but when they get louder, we are then probably closer to a low. Still time and room to fall further. 

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