Align Technology (ALGN) is scheduled to report its second-quarter results after the close of trading here on Wednesday. The charts of the maker of clear orthodontic devices made a low in June but have been bottoming since early May, so let's check out Align's indicators and charts to see how they line up now.
In this daily bar chart of ALGN, below, we can see that prices have been cut by two-thirds from around $750 to around $250. Prices have managed to temporarily recover above the 50-day moving average line, which is now bottoming. The slower-to-react 200-day line remains bearish and intersects up around $450. Trading volume has been more active since early May and is a sign of increased investor interest. The On-Balance-Volume (OBV) line declined to a low in June and shows some slight improvement. A rising OBV line happens when buyers of a stock act more aggressively by trading more shares when the stock closes higher on the day. The Moving Average Convergence Divergence (MACD) oscillator has improved since a low in May and is now close to crossing the zero line for an outright buy signal.
In this weekly Japanese candlestick chart of ALGN, below, we see a mixed picture. I can see both upper and lower shadows the past two months. The slope of the lagging 40-week moving average line is negative, but with prices trading $200 below the line we could consider prices extended (oversold) on the downside. The weekly OBV line has been stable for the past six or seven weeks. The MACD oscillator has crossed to a cover shorts buy signal.
In this daily Point and Figure chart of ALGN, below, we can see a potential upside price target in the $322 area.
In this weekly Point and Figure chart of ALGN, below, we can see a price target or objective in the $380 area.
Bottom line strategy: I have no knowledge of what ALGN is going to announce to shareholders this evening, but its charts have been showing improvement since early May. Aggressive traders could probe the long side of ALGN ahead of the numbers only if they can afford to risk down to $225.
