This is what a gross overreaction looks like for a stock. Vertiv (VRT) is a datacenter company that has seen organic sales CAGR of 16% over the last four years, with 960 bps of adjusted operating margin expansion. Earnings growth comes in at 52% this year and 32% next year. The stock is trading at a PEG ratio of 1.14. All signs point to great things for this stock.
Yet on Monday, after trading above $155 last Friday, the stock came down under the century mark, kissing the 200-day moving average along the way. I feel bad for the investors that might have panic sold into this one. At the surface, it looks like an incredible “Buy the dip” scenario to me. The company’s next earnings report is due out the second week of February, giving it a real chance to prove the market wrong very soon.
Moving Averages: Bartosiak starts by examining the stock's moving averages, such as the 50-day and 200-day moving averages. He points out the significance of crossovers and divergences between these averages, which can indicate potential trend changes.
Support and Resistance Levels: Bartosiak identifies key support and resistance levels on the chart. These levels act as barriers that the stock price must breach or hold above, providing traders with critical decision points.
Chart Patterns: He discusses chart patterns like head and shoulders, cup and handle, or flags, and their relevance in predicting future price movements. These patterns can offer valuable insights into potential bullish or bearish trends.
Volume Analysis: He emphasizes the importance of volume analysis in confirming price trends. An increase in trading volume during a breakout or breakdown can validate the significance of a price move.
Dave Bartosiak's technical analysis approach adds depth to our understanding Vertiv’s stock chart. By paying attention to moving averages, support and resistance levels, chart patterns, technical indicators, and volume, he equips investors with a comprehensive toolkit for making well-informed decisions in the stock market. Remember, while technical analysis is a valuable tool, it's important to consider other factors like fundamental analysis and market sentiment before making investment choices.
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