JD.com, Inc. (JD) may have posted strong second quarter financial results, but the figures failed to impress a market that was looking for more. Since January, the leading Chinese retail company has seen its shares soar more than 70% thanks to strong financial performance, while its valuation remains lower than peers like Amazon.com, Inc. (AMZN​) and Alibaba Group Holding Limited (BABA). However, the recent weakness could lead to an intermediate-term downtrend.

JD.com's revenue rose 41.6% to $13.75 billion – beating consensus estimates by $450 million – while net income of 10 cents per share beat consensus estimates by two cents per share. The company's fulfilled orders rose 41% to 591.2 million, with about 80% of orders placed through mobile devices – a 42% increase in prevalence. During the quarter, the company also made progress in expanding its cooperation with Wal-Mart Stores, Inc. (WMT). (See also: Why Amazon Is Losing to JD.com and Wal-Mart.)

Technical chart showing the performance of JD.com, Inc. (JD) stock

From a technical standpoint, the stock has moved sharply lower off of its 52-week high of around $49.00 toward its 50-day moving average at $42.24. The relative strength index (RSI) has moved to neutral levels of 50.10, but the moving average convergence divergence (MACD) has experienced a bearish crossover. This could signal the start of an intermediate-term downtrend if the stock continues to lose momentum.

Traders should watch for a rebound from the lower trendline support and the 50-day moving average at $42.24 or a breakdown from these levels. A rebound could lead the stock to retest prior highs and R1 resistance at $48.51, while a breakdown could lead shares to short-term S1 support at $40.17 or longer-term S2 support at $35.17. The latter move could close the gap dating back to early May, when the stock gapped up. (For additional reading, check out: Chinese Tech Firms Could Be Hurt by Their Finance Arms: Moody's.)

Chart courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.

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