Don't Ignore This Chart!

Bottomline Is Hoping Gap Support Is The Bottom

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About seven weeks ago, Bottomline Technologies (EPAY) produced excellent quarterly earnings results when its top line edged Wall Street consensus estimates and its bottom line crushed them.  Market participants were expecting 9 cents per share and management delivered a huge beat - to the tune of 18 cents.  That doubling of expected quarterly profit excited traders and EPAY was higher by nearly 17% at its high the next day.  EPAY's average daily volume is currently 400,000 shares, but the day after earnings, volume soared to 3.5 million shares, its highest volume day since 1999.  So the technical question becomes, "can EPAY hold the top of gap support created by that high volume earnings-related day?"  Here's the visual:

I enjoy trading gaps as they help to define risk.  In this case, EPAY resides almost squarely on key gap support.  In addition, its RSI has fallen from overbought territory in early September at 70 to a much more palatable level close to 40.  I'd look for renewed strength from this area.

Happy trading!

Tom

Tom Bowley
About the author: is the Chief Market Strategist of EarningsBeats.com, a company providing a research and educational platform for both investment professionals and individual investors. Tom writes a comprehensive Daily Market Report (DMR), providing guidance to EB.com members every day that the stock market is open. Tom has contributed technical expertise here at StockCharts.com since 2006 and has a fundamental background in public accounting as well, blending a unique skill set to approach the U.S. stock market. Learn More
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