Back in September following a big gap to the downside, we said that Tech Data Corp. (TECD) would need a period of new base building, "Today's price action is not crucial as the bigger picture suggest that a period of repair is needed before TECD might rally again. The $100-$110 area should not act as resistance." A huge rally to the upside yesterday tells us that the repair process is over and that TECD could soon attempt a breakout over its late August zenith.
In this daily chart of TECD, below, we can see a gap to the upside, with prices climbing sharply above the rising 200-day moving average line. The 50-day moving average line turned upward about two weeks ago.
The daily On-Balance-Volume (OBV) line has turned up, telling us that buyers of TECD have turned aggressive. It is hard to see, but the Moving Average Convergence Divergence (MACD) oscillator has turned up above the zero line for an outright go-long signal.
In this weekly bar chart of TECD, below, we can see that the gaps disappear. We can also see that prices have closed back above the still-rising 40-week moving average line. The weekly OBV line looks like it has reversed to the upside and the weekly MACD oscillator is crossing to the upside from below the zero line for a cover-shorts buy signal. An outright go-long signal could come soon and just needs the oscillator to move above the zero line.
In this Point and Figure chart of TECD, below, we can see the selloff in September, the new consolidation pattern and the upside breakout. Assuming an upside breakout, a $130 price target is shown.
Bottom line: After such a sharp move up Tuesday, the price of TECD is likely to trade sideways for a few days before attempting to push higher. Aggressive traders could approach TECD from the long side below $105, risking a close below $96.
