Almost a month ago, yours truly penned a bullish trading outlook on Kandi Technologies Group Inc. (NASDAQ:KNDI). Not being one to "leave anyone hangin'", here's a follow-up recommendation - take the money and run, because KNDI looks like it's gone about as far a it can realistically go for a while. Better to lock down the profit you can than hold out for more profit that's not apt to be in the cards anytime soon.
Just as a refresher, Kandi Technologies Group makes electric vehicles, primarily for the Chinese market. Don't think Tesla (NASDAQ:TSLA), as the vehicles that Kandi makes and the vehicles that Tesla makes are like night and day. Most of Kandi's vehicles, in fact, wouldn't be street-legal in the United States. Driving in China is different than driving in the U.S., however, and go-kart-like "get around" vehicles have a place - and a market - in China.
That's largely irrelevant to us today, however. Today, traders have to make a decision... whether to lock in a 27% gain since June 16th (thanks to today's 13% pop from KNDI), or stick with it knowing this morning's gap could work to pull the stock lower again. My advice? Again, take the money and run.
Just for the record, this isn't how I wanted things to pan out, nor is it how I anticipated the chart taking shape. I was counting on KNDI gently walking back to the $22.00-ish area where it peaked in March, and then getting out. And truth be told, that could still happen. It's the "in the meantime" that changes the risk-vs-reward scenario though. The odds a gap-filling correction are good here, and that dip threatens to start a fairly strong downtrend that sellers wouldn't have even thought to make had Kandi Technologies Group just took their time and walked higher.
With all of that being said, just because the prudent thing to do here is locking in a gain doesn't mean we have to put KNDI on a shelf forever. Once the gap is closed, if the moving average lines around $14.00 end up acting as a support level and start to prod shares higher again, feel free to get back on board. The undertow that got the ball rolling back in May is still intact. It's just a matter of picking and choosing your entry and exit points. For today, the 27% profit is just too juicy to leave blowing in the wind when there's such a sizable pullback risk.
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