Big Data Says Ride the Reversal Higher in Teradata

• Posted by Greg Harmon
• on May 11th, 2016

Teradata, $TDC, was in a rut. The stock had fallen from a high over $45 in May 2015 to a low under $22 in February, When the broad market bounced so did Teradata, but it could never move back over the area that was support at 27.60. That was until they reported earnings last week and canned their CEO. The stock jumped 13% that day, back to the resistance area. What is next?

The chart below shows that jump took the price over the 200 day SMA for the first time since the fall started a year ago. And it has consolidated since. Just a 23.6% retracement of the leg lower. Pretty weak bounce so far. But that consolidation is bullish upon closer inspection. The digestion of the move higher on falling volume suggest sellers dropping by the wayside and that buyers may overwhelm them shortly.

The momentum indicators support a break to the upside as well. The RSI moved into the bullish zone and is holding there while the MACD is rising. The Bollinger Bands® area also opening to the upside. A Measured Move out of the flag would target 32. And with 13% of the float short it has fuel to rise.

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