Garbage In – Money Out: Covanta

• Posted by Greg Harmon
• on May 9th, 2016

Covanta, $CVA, takes trash, like the pile above and converts it into energy by burning it. There is more to it than that but you get the general idea. The stock has had a very rough time 10 of the last 12 months. May last year it started a smooth ride lower from consolidation at 23 to a low in February at just $12.50, over 50% lower. And that consolidation at 23 was after a fall from the all time high over 25.

The bounce that followed gave it a quick retracement of 50% of the down leg and took it to touch the 200 day SMA. The price rejected from there though and pulled back to the 38.2% retracement where it has been vacillating since. Six weeks of sideways motion. And over that time the Bollinger Bands have grown very tight. This is often a precursor to a move in a stock.

As it churns the RSI is holding in the bullish zone and the MACD has reset lower, still in positive territory. There also a Golden Cross that will print this week, with the 50 day SMA crossing up through the 200 day SMA. A range of 90 cents defines this stock until it breaks out. Above 16.90 and it is time to look for a run to 18.87 or higher. Below 16.00 and a retracement to the lows. Do you have the energy to wait and watch?

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