On my last TRXC post, I whiffed on my prediction that we'd probably see the rebound begin late last week. The difference appears to be the result of bond yields' effect on the overall market, which particularly impacted the stocks that have been most bullish this year. Our charts and positions don't exist in a vacuum, and this served as a reminder that we have to account for macroeconomic forces.
That being said, I've studied the relative strength signals and am cautiously optimistic that better days are ahead for TRXC. To analyze relative strength, I used RSX, a Jurik indicator that's essentially a smoothed over version of the RSI indicator. Since May 2018, the RSI has dropped this low on two other occasions, both of which preceded significant multi-wave breakouts. The yellow annotations mark the first time this happened, and the orange annotations mark the second. The green annotations are TRXC's current position and my projection. If you look closely, you'll see a lot of similarities between those two events and the current position. The RSX is flattening and appears to have bottomed out; the %R indicates a favorable buying opportunity, and the divergence between the JMA and the DWMA appears to have stopped. The first time the RSX was recently this low (yellow), the JMA crossed above the DWMA two days later; the second time (orange), the JMA crossed above the DWMA four days later (JMA is another Jurik indicator - I prefer using it to other moving averages because I think it has less lag and less noise, which gives me better buy signals; you will probably get similar signals using TEMA or Hull indicators). Given the current gap between the JMA and the DWMA, I think we are at least four days away from the next cross over (and likely more) - assuming the downtrend doesn't resume.
The pink trend line is a tenuous support level; the .786 fib level is a slightly stronger support, although it hasn't been tested much either. If the closing price or the daily JMA drops below either of these, it would signal a trend reversal and potential buyers would stay on the sidelines. If the JMA converges and crosses above the DWMA, the uptrend should resume (although likely at a slower rate). In that event, we could see an influx of volume from swing traders who want to ride the next wave and investors who've been waiting for an optimal entry point since the last wave. No one can read the market perfectly, not even Todd Pope. The 3mm FDA approval announcement seems like wasted news now, but if not for the massive market-wide sell-off on Thursday, I think it would have launched another breakout. I'm not sure that's necessarily what TRXC needs at this moment - it needs some stability and consolidation. Since the announcement was overshadowed by the market sell-off, we may see a slower, more stable uptrend as investors regain confidence and look for prime opportunities.
So, here's the play: if you've been looking for a TRXC entry point to establish a core position or initiate a medium term swing-trade/momentum trade, watch closely this week. If the securities market continues to stumble and TRXC breaks below the pink trend line and the .786 fib level, wait a little longer, I would hold off on taking a new position (unless you're investing vs. trading). However, if there's a positive signal on the JMA-DWMA (or your preferred MA fast-slow crossover indicator), hop on and enjoy the ride.
For swing positions, I would note one other thing - both times the RSX/RSI recently reached its current level and JMA crossed above DWMA, the first wave of the breakout ended and JMA briefly dipped below DWMA, but shortly thereafter the second wave began and the breakout resumed. Therefore, if you take a position and see your fast indicator cross below your slow indicator, I recommend you study the technicals closely before closing your position. Otherwise, you may get out too early and miss the second wave.
That being said, I've studied the relative strength signals and am cautiously optimistic that better days are ahead for TRXC. To analyze relative strength, I used RSX, a Jurik indicator that's essentially a smoothed over version of the RSI indicator. Since May 2018, the RSI has dropped this low on two other occasions, both of which preceded significant multi-wave breakouts. The yellow annotations mark the first time this happened, and the orange annotations mark the second. The green annotations are TRXC's current position and my projection. If you look closely, you'll see a lot of similarities between those two events and the current position. The RSX is flattening and appears to have bottomed out; the %R indicates a favorable buying opportunity, and the divergence between the JMA and the DWMA appears to have stopped. The first time the RSX was recently this low (yellow), the JMA crossed above the DWMA two days later; the second time (orange), the JMA crossed above the DWMA four days later (JMA is another Jurik indicator - I prefer using it to other moving averages because I think it has less lag and less noise, which gives me better buy signals; you will probably get similar signals using TEMA or Hull indicators). Given the current gap between the JMA and the DWMA, I think we are at least four days away from the next cross over (and likely more) - assuming the downtrend doesn't resume.
The pink trend line is a tenuous support level; the .786 fib level is a slightly stronger support, although it hasn't been tested much either. If the closing price or the daily JMA drops below either of these, it would signal a trend reversal and potential buyers would stay on the sidelines. If the JMA converges and crosses above the DWMA, the uptrend should resume (although likely at a slower rate). In that event, we could see an influx of volume from swing traders who want to ride the next wave and investors who've been waiting for an optimal entry point since the last wave. No one can read the market perfectly, not even Todd Pope. The 3mm FDA approval announcement seems like wasted news now, but if not for the massive market-wide sell-off on Thursday, I think it would have launched another breakout. I'm not sure that's necessarily what TRXC needs at this moment - it needs some stability and consolidation. Since the announcement was overshadowed by the market sell-off, we may see a slower, more stable uptrend as investors regain confidence and look for prime opportunities.
So, here's the play: if you've been looking for a TRXC entry point to establish a core position or initiate a medium term swing-trade/momentum trade, watch closely this week. If the securities market continues to stumble and TRXC breaks below the pink trend line and the .786 fib level, wait a little longer, I would hold off on taking a new position (unless you're investing vs. trading). However, if there's a positive signal on the JMA-DWMA (or your preferred MA fast-slow crossover indicator), hop on and enjoy the ride.
For swing positions, I would note one other thing - both times the RSX/RSI recently reached its current level and JMA crossed above DWMA, the first wave of the breakout ended and JMA briefly dipped below DWMA, but shortly thereafter the second wave began and the breakout resumed. Therefore, if you take a position and see your fast indicator cross below your slow indicator, I recommend you study the technicals closely before closing your position. Otherwise, you may get out too early and miss the second wave.
I'm concerned by accelerating divergence between JMA and DWMA. I extended my fib retracement period and the .5 fib level held up as support @ 4.32, but if that breaks it could drop significantly. I remain bullish on TRXC longterm, but if I were initiating a swing trade, averaging down, or taking a new position, I would wait until you see an MA crossover indication.