Lexmark (LXK) announced after the closing bell on Tuesday that it was acquiring enterprise software company Kofax (KFX) for $1 billion, its largest acquisition in its history. Traders were initially excited by the announcement, driving LXK's stock price higher by more than 11% and LXK cleared bullish wedge resistance intraday and intraweek. Subsequent selling, however, is now reflecting hesitation at that key technical area. Volume is massive today so the close this week will be important. The February high just above 45.00 is another critical price level the bulls will be aiming for. While the acquisition may prove to be a very good one, let's wait to see the technical merits of the deal - either resulting in a high volume wedge breakout or allowing the current excitement to wear off and potentially entering closer to wedge support near 37.50. Here's the chart:
Happy trading!
Tom
