Software company EPAM Systems (EPAM) hit an all-time high at $70.49 in April and pulled back to the 50-day EMA. An algo-driven washout marked the low, with price turning higher and breaking a five-week trendline on Monday. The stock tested the high and pulled back in Tuesday's session, and could now consolidate within the range of the six-day rally. The big sell bar damaged On Balance Volume, but it could recover soon.
The company has broad exposure to Russia and Eastern Europe. I wouldn't chase a new high, given the volume divergence, but a test at new trendline support looks buyable. The stock's history shows a number of washout days, increasing risk that we'll see that type of behavior again. While it isn't a trade killer, it does need to be considered in the reward:risk analysis.
For more market analysis from Alan Farley, sign up for The Daily Swing Trade, published Monday through Friday.
Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.
This action is primarily caused by poor positioning, rather than a sudden improvement in fundamentals.
Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation.
If you have questions, please contact us here.
Email
Email sent
Thank you, your email to has been sent successfully.