Don't Ignore This Chart!

MDSO: Recent Weakness Presenting Opportunity?

 | 

Medidata Solutions (MDSO) posted better than expected revenues and EPS in late April and the stock exploded higher as a result.  Since that time, MDSO hasn't been able to add to those gains, instead consolidating in rectangular fashion with its RSI dropping to 40.  As you look at the chart, you can see that each time MDSO's RSI has fallen back to 40 during its current uptrend, it's been a nice time to enter on the long side.  Will this time be different?  This most recent move lower has failed to hold the rising 50 day SMA for the first time since earnings were reported, but recent price support closer to 53 continues to hold.  Then there's trendline support, which intersects the 53-54 area as well.  A close below 53 would likely lead to a test of very significant price support at 51, the level of price resistance prior to the April earnings breakout.  Volume trends are strong, so I'm expecting that MDSO will bounce sooner rather than later.  We'll see.  Have a look at the chart:

Happy trading and enjoy the holiday weekend!

Tom

Tom Bowley
About the author: is the Chief Market Strategist at EarningsBeats.com, where he provides stock market education, guidance, and trading strategies using a unique combination of technical, fundamental, and historical analysis. Tom provides EarningsBeats.com members with four portfolios (Model, Aggressive, Income, and Value), all designed to beat the benchmark S&P 500, and a revolving Watch List of hundreds of companies reporting strong quarterly earnings (must beat both revenue and EPS estimates) and exhibiting technical strength as well. These companies comprise EarningsBeats' annotated Strong Earnings ChartList (SECL), from which Tom trades exclusively. Tom writes a Daily Market Report (DMR) for members to include an executive summary, market outlook, sector/industry watch, and trading ideas. Learn More
Subscribe to Don't Ignore This Chart! to be notified whenever a new post is added to this blog!
comments powered by Disqus