The S&P 500 is having its worst drop since mid-March. On days like today it can be useful to scan for stocks under accumulation before the selling hit. One of those is Ericsson.
ERIC started running last month after President Trump moved against Huawei. Analysts see that helping the Swedish telecom supplier gain market share in U.S. 5G networks.
ERIC was trapped at its 200-day simple moving average (SMA) before the story hit. It then broke out and ran to an 11-month high before rolling over.
The rally was interesting because it wasn’t anything like the dead-cat bounces in other parts of the market. ERIC was basing out before the pandemic and then fell much less when lockdowns began. It’s now above old resistance, while airlines and hotels are below resistance.
ERIC’s 50-day SMA also rose above the 200-day SMA this week. That kind of “Golden Cross” is also consistent with a longer-term turnaround.
The current price level in ERIC isn’t hugely attractive. Given today’s large bearish candle, there could still be follow-through pressure in coming sessions. A retest toward $8.50, near the 50-day SMA, could also be in the cards.
In conclusion, technical analysis can often be a good way of doing fundamental analysis. Right now, the chart in ERIC is showing signs of a more significant turnaround. It could be a name to watch as the market chops around in the next week or so.
ERIC started running last month after President Trump moved against Huawei. Analysts see that helping the Swedish telecom supplier gain market share in U.S. 5G networks.
ERIC was trapped at its 200-day simple moving average (SMA) before the story hit. It then broke out and ran to an 11-month high before rolling over.
The rally was interesting because it wasn’t anything like the dead-cat bounces in other parts of the market. ERIC was basing out before the pandemic and then fell much less when lockdowns began. It’s now above old resistance, while airlines and hotels are below resistance.
ERIC’s 50-day SMA also rose above the 200-day SMA this week. That kind of “Golden Cross” is also consistent with a longer-term turnaround.
The current price level in ERIC isn’t hugely attractive. Given today’s large bearish candle, there could still be follow-through pressure in coming sessions. A retest toward $8.50, near the 50-day SMA, could also be in the cards.
In conclusion, technical analysis can often be a good way of doing fundamental analysis. Right now, the chart in ERIC is showing signs of a more significant turnaround. It could be a name to watch as the market chops around in the next week or so.