Does Silk Road Medical Have a Smooth Path Forward?

After gaining a fundamental supporter, here's how aggressive traders could play the stock.

Silk Road Medical (SILK) was rated a new fundamental "buy" at sell-side firm B. Riley on Friday. The company is focused on reducing the risk of stroke and it has pioneered a new approach for the treatment of carotid artery disease called TransCarotid Artery Revascularization (TCAR). TCAR is  a minimally invasive procedure that can clear blockages and open a narrowed carotid artery. 

Let's check out the charts and indicators.  

In this daily bar chart of SILK, below, I can see a mixed picture. Standing back from the chart shows me a broad sideways pattern the past 12 months. Looking closer to the chart I see a downtrend from early February. Prices trade below the declining 50-day simple moving average line and below the cresting slower-to-react 200-day moving average line. The trading volume histogram shows an increase in activity in March and this suggests increased investor interest.

The daily On-Balance-Volume (OBV) line shows uneven weakness from December as traders appear to have become more aggressive sellers. The Moving Average Convergence Divergence (MACD) oscillator is in a bearish alignment below the zero line but it has narrowed towards a potential cover shorts buy signal. 

 

 

In this weekly Japanese candlestick chart of SILK, below, I see a potential bottom reversal pattern - a harami. I still need to see a bullish candle for confirmation but this is a start. Prices are below the 40-week moving average line.

 

The weekly OBV line shows weakness into March but a possible low. The MACD oscillator is pointed down to the zero line. 

 

 

 

In this daily Point and Figure chart of SILK, below, I can see a potential downside price target in the $35 area - a slight new low from here. 

 

 

 

In this weekly Point and Figure chart of SILK, below, I can see that prices have reached and exceeded a downside price target in the $40 area. 

 

 

Bottom line strategy: In full disclosure I have lost all my immediate family members to strokes so I am very interested in this company and their procedure. The quickest turning charts are Japanese candlesticks, in my opinion. I am watching SILK for confirmation of a harami pattern. Aggressive traders could probe the long side of SILK at current levels risking to $36.

 

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