Energy was the big winner this week as it gapped up on the open Monday. Since then, price has consolidated somewhat and could be forming a reverse island formation. Looking under the hood at our indicators for XLE, we have quite a few that are very overbought. The 20-EMA is on its way to a positive crossover with the 50-EMA for a "silver cross," which would generate a new IT Trend Model BUY signal. This is a powerful breakout from a bullish descending wedge and the first time we've seen price remain consistently above the 50-EMA. The PMO is positive again and rising on a BUY signal, while the RSI is positive and not yet overbought. The Energy sector still has potential to continue higher despite some of those indicators being very overbought.
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Now it's time for....<drum roll> THE....
DecisionPoint "Diamond of the Week"
Fastly, Inc. (FSLY)
EARNINGS: 2/18/2021 (AMC)
Fastly, Inc. provides real-time content delivery network services. It offers edge cloud platforms, edge software development kits (SDK), content delivery and image optimization, video and streaming, cloud security, load balancing and managed CDN. The company was founded by Artur Bergman, Simon Wistow and Gil Penchina in March 2011 and is headquartered in San Francisco, CA.
I hold a "Diamond Mine" trading room on Fridays for DP Diamonds subscribers only. This intimate trading room is a favorite of mine, as we all have become family. The symbol requests that come in from subscribers often trigger my selection for my "diamonds in the rough" and this is exactly that. My eyes popped out and I'm sure someone in the trading room heard my "wow" when it materialized on my computer screen.
This is the type of set-up I love. Momentum is swinging higher as the PMO goes in for a crossover BUY signal. The RSI is rising and is nearly in positive territory. The SCTR is in the "hot zone" above 75 (meaning it is in the top quartile among its peers). The best part, however, is the bullish double-bottom that just formed on top of the 200-EMA. Yesterday, the pattern was triggered as price broke above the confirmation line (that just so happens to line up with major overhead resistance). Today, we saw some follow-through to the upside and a move above the 20-EMA. I do note that it is down -0.49% in after-hours trading, so there likely is a better entry to be had. I set the stop at 8.5%, which lines up just below the lows in August and September.
If this type of analysis is appealing to you, join me in the free trading room on Monday. Registration links are above. Julius de Kempenaer of RRG Research will be joining me in the November 30th free trading room, so register now for this FREE recurring event.
Happy Charting! - Erin
Technical Analysis is a windsock, not a crystal ball.
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