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Swing Trade Idea (LI) – July 23, 2024

Our bullish trade for Tuesday, July 23rd is Li Auto Inc (LI). LI is part of the Industrial Sector, which is pulling back from the top of an uptrend channel and performed at 2.36% over the last month. LI overperformed relative to its sector over the same period at 13.48%.

LI found support at $19.50 and recently bounced higher off this level. It is currently trading at the 50 Day EMA and a break above this level over the next few days will likely lead to further upside, with the next target at $22.50. We are playing a bullish Credit Spread on this trade to generate a Premium/Width of over 48%.

As a close, if LI were to trade below $19.50 for multiple days, this would invalidate our analysis and we will consider cutting losses on the trade. We will also consider cutting losses on this options trade if the value of the vertical spread moves above $2.41.