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The recent earnings report from Joy Global (JOY) certainly took some joy out of the stock, which ranks among the components of PowerShares Dynamic Mid Cap Growth Portfolio Fund (PWJ) and PowerShares Dynamic Mid Cap Portfolio Fund (PJG). Still, let's take another look with some technical analysis, and see where it stands now. The original setup was a Fibonacci price cluster that essentially include three 100% price projections of prior declines, along with a 0.618 Fibonacci retracement of the Dec. 19 low to the Jan. 26 high. This defined the $81.53-to-$83.21 area as a key price support decision.
The area was tested, and the stock held above it, the stock making a low Feb. 10. On Feb. 16, a buy trigger fired off on the 30-minute chart, right around the $85.50 area. A healthy rally followed this trigger up to the $94 level, or $11 off the lows.
But, a bit before earnings, shares started to get a bit squeamish. If you were long the stock, your choice was either to book a profit before that point, or to take your chances and sit through the report. Sadly, that latter option would have been the wrong way to go.
What we are left with, however, is the original setup that is still intact. If we see a new buy trigger as Joy Global retests the original support decision, the stock will still be good to go. Right now, I am once again watching the 30-minute chart for another potential trigger that could take the stock to the original first target at the $99.54 area.
For the new buy trigger on Joy Global, I want to see at least two things occur: A prior swing high should be taken out, thus indicating a price reversal and a moving-average crossover will need to confirm an entry. For that latter item, I use a crossover between the eight-day exponential moving average crossing and the 34-day EMA. I have not seen a buy trigger fire off just yet, though I will continue to look for one as long as price holds above the Feb. 10 low. If this low is taken out, I will move on to the next trade setup.
Let's see if Joy Global can live up to its name!