The stock is breaking out of a channel within a channel, and each pattern projects a move higher. Here’s the story published this morning on TheStreet.com.
Home carbonation was, perhaps, a concept that was ahead of its time, but nevertheless, SodaStream (SODA) shares have fallen about 77% in value over the last two years. The weekly chart chronicles the decline, but notice the small rounding bottom that has been forming this year. Overall volume is extremely low, but price and money flow momentum indicators are turning positive. Bollinger bandwidth is contracted, and the 50 and 200 day moving averages are converging, setting up the potential for a volatile move.
The stock price is up 3.5% at this point in today’s session and with a 17% short interest, there could be a minor covering rally.
SodaStream is a small cap, highly speculative trading vehicle, and any trade would be short-term in nature and require strict tight stops.
The late day reversal on Friday and the continued broad market strength today is helping to validate the Morningstar pattern I highlighted on Thursday:
The closing strength in the Russell 2000 Index yesterday was a harbinger of good things to come. The volatility in the last several sessions has created a candlestick reversal pattern on the DJIA, S&P 500 Index, and NASDAQ Composite charts. The Morningstar pattern is a three-day formation that requires first a large dark or down candle, followed by a narrow opening and closing range candle, and is completed by a large white candle. It represents a transition from bearishness-to-bullishness and is usually seen at important bottoms and after significant declines. Like all patterns it requires confirmation, but perhaps it is another harbinger.