Category: Market Updates

In this report we analyzed: INSG, TWLO, DT, ROKU, AMD, LVGO, TDOC

Please note the glossary of terms and techniques here and here.here and here.

You can access our portfolio here. You can also track in real time our buys/sells/position updates in the forum. If you want to track us in real time, we recommend that you set up alerts to these 3 chat rooms.  here. You can also track in real time our buys/sells/position updates in the forum. If you want to track us in real time, we recommend that you set up alerts to these 3 chat rooms.  

Twilio (TWLO)

We will look to add on the coming pullback, which we expect to be relatively shallow as of now.

Summary

• Twilio has shown great relative strength in spite of broad market weakness.
• Negative divergence in the MACD is suggesting a pullback is near.
• I’m expecting the pullback to be relatively shallow and to bottom well above the earnings gap.
• We will lower our stop to $186.90.

Key Price Levels

• Below Support levels to monitor: $211-$210, $190, $177-174.
• A break below $152.40 will make closing the large gap a likely outcome – we want to avoid this which is why we have the stop outlined above.

While the S&P 500 is down over 7% since it recently topped, Twilio is up about 16% in the same time frame. This is the type of relative strength we look for in market downturns. Furthermore, it’s worth noting the base that Twilio has built during this period of market weakness. We have noted this base in the chart by the green dotted arc below the recent price movements.

Since gapping up on its last earnings report, TWLO has slowly drifted higher towards the $211 resistance on decreasing selling volume. It then broke through this level, and has had a tight consolidation above the now $211 support region. Volume is starting to spike up as Twilio reached new highs above this consolidation point. We will now want to see a strong follow through for confirmation.

Regarding the Elliott Wave count, which can provide a general path forward, It is possible that TWLO is in the final 5th wave (light blue) within the larger degree 3rd wave (dark blue). This would explain the negative divergences we are seeing in the MACD, and it’s what I believe is actually going on. In short, if this is true, it helps support a relatively shallow pullback.

TWLO is due for a minor pullback that should consolidate above the gap. We will lower our stop on TWLO to the closing price of $186.90 in order to give it a little more room to breathe.

Inseego (INSG)

A strong break above $11.30 and we will add to our position in INSG.strong break above $11.30 and we will add to our position in INSG.

SummarySummary

• Inseego has built a solid base, which I noted by the blue arc below the recent price movements.
• It’s formed an inverse head and shoulders pattern just below $11.30.
• A strong break above $11.30 will confirm the next leg up.
• We will look to add on the breakout.

Key Price LevelsKey Price Levels

• $11.30 is the primary resistance level to watch.
• Below $9.20 signals a break of the base INSG built and lower levels ahead.
• If $9.20 breaks, look to $7.75, $7, $6.50 for a potential bottom.

In our May 17th report, we noted the positive divergence forming in INSG. Because of this, we went long, and since then we are up about 16%. Further encouragement has followed due to the solid base INSG has formed above the 55-day EMA (in red).

The price is now approaching the $11.30 resistance while the MACD is coiling. This is the type of internal pattern we see before the next move up. Furthermore, the price has formed an inverse head and shoulder pattern below this level, to further build the bull case.

We are in a period of market weakness, which will be a hurdle Inseego will need to continue to overcome. As long as it holds the $9.20 support, the base INSG has built will remain intact. Below this level, and the yellow band will come into play between $7.75 – $6.50.

Roku (ROKU)

A strong break above $131.50 is a new signal to go long. A break below $113 is the signal to target the $102-$89 support.strong break above $131.50 is a new signal to go long. A break below $113 is the signal to target the $102-$89 support.

SummarySummary

• Roku has spent 7 days above the previously noted resistance levels, which is now support.
• Roku is also forming a solid cup and handle pattern.
• It is retesting these levels now and setting up for a breakout move above $131.50.
• A break below $113 signals a failed uptrend.

Key Price LevelsKey Price Levels

• $131.50 is the primary resistance to watch now.
• $113 is the main support.
• Below $113, and $102 – $89 region comes into play.

Roku has broken above the downward trendline in red and the 200-day SMA in black. These two levels have kept Roku bottled up for most of this year. Recently, it has closed 7 days above these key levels and stayed between 14%-4% above these levels. This lends to the case that this recent move up is not another fake-out.

The recent move has also given us the final confirmation level to signal a large cup and handle pattern that will be confirmed on a break above $131.50.

As long as the $113 support level holds on any pullback, the bull case for Roku can hold. However, below $113, and the green target box comes back into play.

AMD (AMD)

AMD is setting up for another buy around the $49-$47 range.

SummarySummary

• AMD is reaching an inflection point between a relatively large breakout or breakdown.
• It is approaching a large cluster of important supports with positive divergence showing up on the MFI.
• We will look to take advantage of this setup.

Key Price LevelsKey Price Levels

• Key resistance that will signal a potential breakout – around $57.
• Key support that will signal a breakdown is the 200-day SMA, which is around the $44.50 region today.
• Primary target zone for a favorable risk/reward trade will be in the high $48 region.

We recently stopped out of AMD as the price closed below the 55-day EMA. We closed the position around the breakeven price. As you can see in the above chart, AMD is trading in between two major trendlines in blue. The above trendline has acted as resistance, bottling up the price from making a substantial move up. The below trendline is a four-year trendline that AMD has tested and held 5 times so far, not including the potential test we will likely see soon. One of these levels will give way to a sizable move.

Regarding trendlines, the longer it remains in place and the more times it holds a test, the more meaningful it is. This should put into focus the importance of the below trendline. Furthermore, the 200-day SMA in black just below this trendline. This will be the final support for AMD’s impressive uptrend since 2016.

However, the strength in the internals of AMD gives credence to the bull case. The RSI has broken the 50 line, which leaves the 40 line as the next support. This level held in the March selloff, and we expect it to hold in the coming selloff. However, note the MFI. It is showing clear positive divergence, signaling a bottom is near.

The $49-$48 region is a large cluster of Fibonacci prices levels as well as symmetry points. This should coincide with the below trendline, as well. We will look to try again on AMD, which will setup a favorable risk/reward trade, which we hope will turn into a long term position in AMD.

Dynatrace (DT)

Still largely unknown by the market, DT is expected to have a shallow pullback within a much larger uptrend. This pullback is another buyable event.

SummarySummary

• We will target the $37-$32 region to add to our current position.
• Below $29 and the uptrend is in jeopardy.
• As long as the $29 region holds, the 5 wave pattern we are tracking is projecting a big move.

Key Prices to WatchKey Prices to Watch

• $37-$32 is the buy zone.
• Below $29 and the uptrend is in jeopardy.

Dynatrace appears to be completing its 3rd wave (red) within a larger degree 3rd wave (blue). We are seeing negative divergence in the MACD, which is characteristic of 5th waves. This also supports our case, because we are likely completing the 5th wave within the 3rd wave right now.

If this where we are in the current count, we should see DT bottom between $37-$32. We will look to add within this price range. If the $32 level breaks, the final level in the uptrend will be $29. We will use this level to place our stop on this new trade.

Teladoc (TDOC)

As extended as TDOC appears, this is a stock that could continue to out-perform this year. We will look to make our first attempt soon.

SummarySummary

• Teladoc has built a good base as it attempts to breakout above the $205 resistance.
• The internals are weak, supporting a retest of support first.
• We will look to go long on the breakout, or target the yellow band between $158-$138.

Key Price LevelsKey Price Levels

• Above $205 signals a breakout.
• If $197-$190 breaks below, it will put the yellow band in play between $158-$138.

Teladoc has formed a solid base, as noted by the blue arc on the chart just below the recent price movements. The selling volume has stayed subdued as the price approached the breakout zone at the $205 resistance. A clear break above this price and we will go long with a very tight stop.

There are some concerning signs that need to be pointed out. First, note the negative divergence on the MACD – it is making lower highs while price continues to climb. Also, the Accumulation/Distribution line noted a rather large dump at the end of the trading day on Friday. This coincides with a large selling spike in volume, which made a bearish engulfing pattern on the daily chart. All of these together will make a tough barrier for TDOC in the coming days.

If Teladoc fails at the current level, we will look between the $158-$138 for entry.

Livongo (LVGO)

LVGO is signaling a top is near, which should give way to a notable pullback that we will use to enter the stock.

SummarySummary

• This stock, like Teladoc, could have a large runway ahead of it due to remote health care
• It will likely be choppy considering that it is relatively small and a momentum darling.
• If the 20-day EMA breaks in blue, we will target the $56-$38 region for an entry.

Key Price LevelsKey Price Levels

• If we break to new highs, the next resistance region for a potential top will be $85.
• If the 20-day EMA in blue gives, the green target box comes into play between $56-$38
• A break below $30 signals an end to the uptrend we are tracking.

Livongo is another stock that has had an epic run this year. This is a stock we will keep an eye on for future trades this year, especially as the stock could be dumped by momentum traders taking gains and/or causing big swings. We will use these swings to trade the stock.

I believe we are approaching one of those moments. We are seeing notable negative divergences between the MACD, RSI and the price. Furthermore, the RSI is holding the 60 line. Once this level gives, it will signal the pullback we are targeting.

Assuming LVGO does not make a higher high, my current Elliott Wave count has us completing the larger degree 3rd wave in blue. The 4th wave targets will be between $56-$38. This is a larger target area than normal, due to the small market cap of Livongo and recent popularity.

We are not sure where within this target region we will initiate. So, we will use basic technical analysis to assist us along the way. For long term buy and hold investors, please review Beth’s recent pdf. The growth in this segment (LVGO and TDOC) could outperform other cloud software this year. So, we may not get too picky with our cost basis if we hit the upper regions of our target box.