Don't Ignore This Chart!

This Small Technology Company Is Drifting Back To Support

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When a stock breaks out to fresh highs with light volume, a negative divergence and overbought oscillators, you need to be on high alert for a period of selling.  That's exactly the signal that ORBCOMM (ORBC) provided astute traders as we entered April.  Since that time ORBC has pulled back approximately 9% and is approaching key price support and its rising 50 day SMA.  I would expect buyers to begin lining up near the 9.50 level.  Check out the chart:


Volume on breakouts has been extremely heavy with pullbacks accompanied by much lighter volume.  Note also that while both the RSI and stochastic were stretched at the recent price high in early April, both have now dipped to levels that make sense for entry.  You can see during the uptrend how ORBC tends to turn higher once the RSI reaches the 40-50 support zone.  While technical analysis never provides us any guarantee, the RSI has dipped back into the 40s, indicative of a much better reward to risk entry.

Happy trading!

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
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