SmileDirectClub Has Started to Grin

Let's check out a couple of charts in light of recent insider purchases.

SmileDirectClub Inc. (SDC) is a relatively new issue as we have less than 12 months of trading history and only two months of data on the 200-day moving average line. Despite this handicap let's check out a couple of charts in light of recent insider purchases.

In this daily bar chart of SDC, below, we can see that the shares declined from last September to March/April. Prices firmed into early May and have traded sideways through August. SDC recently rallied to a new high for the move up and above the neutral 50-day moving average line and the bottoming 200-day moving average line.

The On-Balance-Volume (OBV) line has moved sideways since May and even with the recent rally and increased trading volume the OBV line has not (yet) made a new high for the move up.

The Moving Average Convergence Divergence (MACD) oscillator is just below the zero but poised to cross to the upside for a potential buy signal. 

 

In this daily Point and Figure chart of SDC, below, we can see a potential upside price target of around $21. 

 

Bottom-line strategy: Insiders typically get stock in a company from new incorporations and via options. It is relatively rare that they make purchases in the open market. Because insiders as a whole have a decent record of buying company stock when it is "cheap" or "undervalued" traders and outside investors take this information as a sign of confidence in the company. Insiders are prohibited from making quick trades in the company stock.

 

I got conventional braces very late in life so I am behind the curve in this new technology. Traders willing and able to risk a close at least below $7 could approach the long side of SDC.

 

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