DXCM rallies $31.70 (12.57%) after posting strong earnings
DexCom Inc. (DXCM) Technical Analysis Report for Feb 14, 2020 | by Techniquant Editorial Team
Moving higher for the 2nd day in a row, DXCM finished the week 18.19% higher at 283.91 after surging $31.70 (12.57%) today on high volume, strongly outperforming the S&P 500 (0.18%) following Thursday's earnings report. This is the biggest single-day gain in over three months. Today's close at 283.91 marks the highest recorded closing price ever. Trading up to $41.53 lower after the open, the share managed to reverse during the session as bulls took control ending the day above its opening price. Ending the day with an indecisive close, neither buyers nor sellers were able to gain control during the session.
Daily Candlestick Chart (DXCM as at Feb 14, 2020):
DXCM reported earnings of $1.15 per share after Thursday's market close. With analysts having expected an EPS of $0.75, DexCom Inc. topped market expectations by 53.3%. The company's last earnings report was released on Nov. 6, 2019, when DexCom Inc. reported earnings of $0.65 per share beating market expectations by 261.1%.
Friday's trading range has been $52.73 (18.58%), that's far above the last trading month's daily average range of $9.36. Weekly volatility is also higher, being way above the market's average weekly trading range. The longer-term, monthly volatility is currently significantly higher than usual for DXCM.
Although trading as low as 242.27 during the day, the market has decisively rejected those price levels and formed a bullish Pin Bar closing $41.64 above today's low. Additionally, five candlestick patterns are matching today's price action, the Gravestone Doji, the Hanging Man and the Northern Doji which are known as bearish patterns and two neutral patterns, the Doji and the Long-Legged Doji.
After trading down to 242.27 earlier during the day, DexCom bounced off the key technical support level at 247.34 (S1). The failure to close below the support might increase that levels significance as support going forward. When prices bounced off a significant support level the last time on February 7th, DXCM gained 2.79% on the following trading day. The stock was bought again around 242.27 after having seen lows at 242.27, 243.44 and 242.54 in the last three trading sessions. Obviously there is something going on at that level.
With another close above the upper Bollinger Band, prices are confirming their strong upward momentum in the short-term. A drop back into the Bollinger Band on the next trading day though could signal a potential change in momentum that might lead to a correction back down towards the center of the Bollinger Bands at 241.59.
The trend is clearly bullish, showing an intact uptrend in the short, medium and long-term.
Among the 18 market conditions that our pattern recognition engine identified today, the statistics for the Stock Earning Report based market condition "Trading Day post strong Earnings Report" stand out. While it is usually interpreted as neutral, it has actually shown to be bullish for DexCom. Out of 16 times, DXCM closed higher 62.50% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 68.75% with an average market move of 3.72%.