In this post earnings, election turmoil, bear market rally we are scanning for stocks that could breakout. As excited as we may be about the rally sparked by the CPI data, we just aren’t out of the woods yet. This leaves us on the hunt for stocks that may have been pushed down farther than they should have been that are ready to ride this current rebound move for a nice jump up.
One we have looked at in the past is Tandem Diabetes Care, TNDM. It has taken a hit after a tough earnings report and really got knocked down. But there are a couple factors that are showing it could have been an overreaction from the market. Let’s take a look:
The first sign that shows a glimmer of hope is that it found support after the earnings report slashed the stock price. This offers a hint that it can take a bit of a beating. You can see the 10 day moving average adjusting to the new range but we can also see the stock reaching to break through the 10 and use it for support. The chart also shows that it didn’t get knocked as much as it did earlier this year. The MACD is starting to curl and could make a move to cross.
The confirmation we are looking for here is the move through the 10 and then finding support from it to push higher. The clincher will be a cross of the MACD that indicates it has the momentum it will need to recover.
This is not without risk. The earnings issues could reflect bigger problems but TNDM has a very strong foothold in this market and is unlikely to go away. It is also early and, depending on your risk tolerance for a trade like this, you could jump in now to grab as much of a potential move as possible or you could wait for the confirmation.
Andy Chambers has an approach that it ideal for this type of situation. He sets up a trade that offers more time for an expected move to play out and also more chances for that trade to become a big winner. To see how he does it check out his Market Propulsion program here.
Keep learning and trade wisely,
Market Wealth Daily