DISH Stock: Trending Higher Again
The DISH Network Corp (NASDAQ:DISH) stock price got cut in half in a span of one year. DISH stock hit a high of $80.75 in February 2015 and hit a low $38.85 in February 2016.
Some could look at this as major setback in price, and perhaps a bear market was serving to signal that, fundamentally, this company may have hit skid row and that something more ominous was to follow.
I, on the other hand, see things completely differently. This drop in share price, albeit a painful ordeal, was nothing more than a pullback within a much larger bull market trend. As a trader, I have trained my eyes to see patterns and trends on a stock chart and I have used this method to develop trading strategies for more than a decade.
I have seen similar draw-downs in stocks like Apple Inc. (NASDAQ:AAPL) and Amazon.com, Inc (NASDAQ:AMZN), and at times it may feel like the sky is falling, but this type of trading action has become the norm.
DISH Network stock has been in a bull market since shares bottomed in 2009, and the following chart supports this view.
Chart courtesy of StockCharts.com
There are two key features on the DISH Network stock chart above: the uptrend line and the Fibonacci retracement numbers. DISH Network stock has adhered to these trading tools impeccably.
The first key factor is the uptrend line, and it is a piece of trend line perfection. The slide in DISH stock was halted when this level of support was hit in February 2016. This line represents the overall bull market in DISH stock, and as long as DISH stock is trading above this trend line, my bias is undoubtedly bullish.
The second key factor is the Fibonacci retracement numbers (highlighted in green). These retracement numbers are a very popular tool used by many technical traders. This tool is used to identify counter-trend price objectives. In theory, when a stock pulls back from a primary trend, shares will retrace approximately 50% to 62% of the primary move. This zone usually offers support, as traders will be eyeing this area as one in which to enter long positions or cover short positions.
DISH stock has conformed to this tool perfectly. The grey box in the chart above is what traders refer to as “trading into the box.” When shares fall into the box, it signals to traders to cover their short positions and to start building long positions.
Using this technique to purchase shares proved to be a winning strategy for those fortunate enough to use it. The long position from this strategy would have generated a paper profit of 27.9%, if we assume an average cost of $43.00.
The following DISH Network stock chart illustrates the positive developments that followed the successful test of support.
Chart courtesy of StockCharts.com
There are two distinct signals on the chart above that reinforce the bullish premise: a golden cross and a descending triangle breakout.
The first signal, a golden cross, was generated in August 2016. A golden cross is a bullish signal that is produced when a faster 50-day moving average (highlighted in blue) crosses above a slower 200-day moving average (highlighted in red). Traders use this signal to confirm that a bull market is on the horizon. It is always wise to trade in the direction of this momentum indicator.
The second signal came from a descending triangle breakout. The descending triangle highlighted on the chart above constitutes a continuation pattern. This triangle represents a level of price congestion that alleviated any overbought conditions and allowed bulls and bears alike some time to digest this new price level before the next leg began.
In September, the price broke out of this triangle, and moves out of triangles are especially powerful. The power generated from these patterns is due to momentum being built, as both bulls and bears fight for positioning. The upside breakout signals that that bulls have won this battle, and the bears running for cover helps fuel the move.
Last Words on DISH Network Stock
I am bullish on DISH stock and my bias will continue to be bullish for as long as DISH stock trades above the uptrend line I outlined above. I believe that the new bullish trading signals have provided the necessary tailwinds for DISH Network stock to stage a run.