EMC Stock: Time to Catch Up to Its Peers
Marijuana stocks are ending off 2017 on high note, and with no pun intended, the moves that this sector is currently experiencing are awe-inspiring. I have decided to focus on Emblem Corp (OTCMKTS:EMMBF, CVE:EMC) stock because EMC stock has been lagging behind its peers. If Emblem stock is ever going to play catch-up, it is going to do so when it breaks above a couple of important and influential price metrics.
Using price metrics found on a company’s stock chart in order to generate a view on an investment is a method called technical analysis. I have been using this method to create investment strategies for nearly two decades, and I have yet to come across another method of analysis that works as well as this one does when it is applied correctly.
The good news I have to share is that, as I am currently writing this report, Emblem stock is attempting to break above two influential and important price metrics. These metrics are highlighted on the following stock chart.
Chart courtesy of StockCharts.com
The two metrics highlighted on this Emblem stock chart are the 200-day moving average and the sideways channel.
The 200-day moving average is an influential and significant price metric because it acts as a dividing line that separates bullish investments from bearish ones. Distinguishing between these two polar opposites is as easy as pinpointing which side of the 200-day moving average EMC stock is trading on. Trading below it is bearish and trading above it is bullish. It is that simple.
This stock has been trading below the 200-day moving average since it fell below it in May this year. For seven months, the stock price has traded in a defined range below the 200-day moving average.
This defined range is highlighted on the stock chart as a sideways channel, and it is defined by the stock’s inability to break above a significant level of price resistance or fall below a significant level of price support. These significant levels of resistance and support were used to capture this price pattern using two parallel trend lines.
On December 27, Emblem stock pierced through the 200-day moving average, and it is now trading above it. This feat suggests that this investment is now bullish once again.
On December 28, EMC stock broke out of its trading range, and this event is highlighted on the stock chart as a breakout. Breaking out of the prolonged trading range that spanned seven months is an indication that the predominant trend lower has reversed, and therefore, higher stock prices can be expected to follow.
The price action surrounding the price metrics I have outlined are suggesting that EMC stock is currently geared toward higher prices. This bullish view is being reinforced by a very influential momentum indicator, which is highlighted on the following stock chart.
Chart courtesy of StockCharts.com
The influential momentum indicator highlighted on this stock chart is the moving average convergence/divergence (MACD) indicator.
MACD is used to determine whether bullish or bearish momentum is influencing the price action in a stock using the crossing of a signal line. I find that this indicator gives pertinent information because a stock cannot stage a sustained move toward higher or lower prices without the applicable momentum.
For example, in February, a bearish cross was generated, indicating that bearish momentum was influencing the price action in this stock. The share price proceeded to sell off, and 50% of the company’s value was shed.
In September, a bullish MACD cross was generated, and it has been suggesting that bullish momentum continues to influence the price action in EMC stock. Therefore, the path of least resistance is geared toward higher prices. This indication provides the necessary backdrop that supports further gains in this stock.
Emblem stock is breaking above key metrics, suggesting that EMC stock is now ready to play catch-up with its peers, which have been significantly outperforming. This bullish view is predicated on the notion that the stock price remains above $2.10, which is the level that defined the trading range.