|Figure 1, a weekly chart, shows the stock price hitting a two-year low, closing at the low of last February's bottom hammer candlestick. The current candlestick is close to a hammer but the tail or lower shadow is a bit short for the classic hammer signal, which ideally has the tail at least twice as long as the real body. Either way, I like the low-risk entry point here.|
|The indicators displayed do reflect a very early entry point consideration. The moving average convergence/divergence (MACD) still needs to turn up, but this indicator does tend to lag. The relative strength index (RSI) hints at support very near the often telling 30 level.|
The stochastic oscillator is in an oversold condition and needs to break above its 20 level before it turns bullish.
|FIGURE 1: SNDK, WEEKLY. A low-risk entry can be considered on this chart of the electronics technology company.|
|Graphic provided by: StockCharts.com.|
|Should this indeed turn out to be a bottom for this stock, several upside targets are anticipated. The overhead 20-period exponential moving average (EMA), currently $46, matches a previous support/resistance level, making this the first upside target. Should this level be broken, the next target is $50, another previous level of support. The most ambitious target is the trendline near $55.|
|Whether the stock does turn here remains to be seen. The question is whether this is merely a bear rally to the 20-day EMA. The lure of this early entry is to capture a handsome gain, even if it turns out to be a failure move to overhead resistance.|
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