Don't Ignore This Chart!

Is This Stock Being Accumulated or Distributed?

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Sometimes, when I look at a chart, I see conflicting signals. That is definitely the case for 10x Genomics Inc. (TXG), an $18.1 billion medical equipment company. Medical equipment stocks ($DJUSAM) have been consolidating for the past 2-3 months, which has led to relative underperformance by the group as a whole. That has weighed on TXG as the stock has been downtrending for months -- even before the group's run higher ended in early September. But are our eyes deceiving us? Is TXG being accumulated during this period of weakness?

The AD line has been trending higher for months while price action moves lower. That doesn't happen too often and rarely to the extent we're seeing here. Short-term, if TXG fails to hold gap support near 164 on today's close, then a trip to test recent price lows closer to 159 look more likely -- we're nearly there. If 159 fails to hold, then another 10 dollars to the downside is quite possible. But, longer-term, the rising AD line could certainly be a bullish development. We'll soon find out.

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Happy trading!

Tom Bowley, Chief Market Strategist

EarningsBeats.com

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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