These Indications Suggest That ENDP Stock Has Finally Found a Bottom

endo pharmaceutical stock
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ENDP Stock: A Multitude of Indications Are Saying the Same Thing

It’s not a secret that I am bullish on the stock market. I believe that the latter half of 2018 is going to be much better than the first half, and the evidence has already presented itself.

First, the Russell 2000 forged a new all-time high and then, so did the Nasdaq Composite index. Now, a number of sub-indices have done the same. These are clear signs of inherent strength, supporting the notion that we have not yet seen the peak in this ongoing bull market.

I am going to change gears a bit. Instead of focusing on a stock that is primed for further gains, I am focusing on Endo International PLC (NASDAQ:ENDP) stock because I have reason to believe that this stock has finally found its bottom.

My beliefs are based around a number of technical indications suggesting that the worst is now behind ENDP stock and that the stock can finally make a move toward higher prices.

The first indication is highlighted on the following Endo Pharmaceuticals stock chart.

Chart courtesy of StockCharts.com

This chart captures the price action that has occurred since inception.

The significant level of price resistance that is highlighted on the above stock chart resides at $5.00, and it is the all-time low. This level was first established in August 2000 and was revisited in June 2002. Sixteen years later, Endo Pharmaceuticals stock has gone full circle and bounced off the low once again.

If there is ever going to be a price point where ENDP stock finally finds a bottom, it will be on this significant level of price support.

The following stock chart illustrates that, after this significant level of price support was tested, a number of technical indications were generated, suggesting that the trend toward lower prices has finally come to an end.

Chart courtesy of StockCharts.com

After price support was tested, a bullish RSI signal was generated.

The relative strength indicator (RSI) is used to determine whether a stock is overbought or oversold. These extremes are measured using an oscillator that fluctuates between zero and 100. An RSI reading above 70 suggests that a stock is overbought. An RSI reading below 30 suggests that a stock is oversold.

A reading doesn’t become a signal until it returns from one of these extreme signals.

Let me explain.

When the RSI crosses above 70 and then crosses back below it, it creates a bearish signal. When the RSI crosses below 30 and then crosses back above it, it creates a bullish signal. In each case, the signal suggests that the trend that preceded it has run its course and that a new trend has begun.

For example, in April 2015, a bearish RSI signal was generated when ENDP stock was trading at $84.07. This signal suggested that the bullish trend that preceded it had run its course and that a move toward lower prices was likely to follow.

True to its nature, a bearish trend did follow. Three years later, in April 2018, Endo Pharmaceuticals stock hit a low of $5.27, shedding 93.8% of its value.

In June 2018, a bullish RSI signal was finally generated. This was no easy feat because the RSI indicator was embedded below 30, and it took more than two years to finally break above it. This significant feat is suggesting that the bearish trend that preceded it has finally run its course and that higher prices can finally prevail.

The bullish RSI signal coincided with the second indication highlighted on the ENDP stock chart, which was a break above a downtrend line.

This downtrend line was first established in August 2016, shortly after the RSI became embedded below 30. This downtrend line acted as a level of price resistance, and it thwarted all attempts to move beyond it. In June 2018, the stock price finally managed to break above it.

Breaking above the downtrend line is a significant event just like the bullish RSI signal. These coinciding indications suggest that a bottom has been put in place  and that higher prices are likely to prevail.

If these signals are not enough, I added one more indication supporting this notion, and it is highlighted on the following Endo Pharmaceuticals stock chart.

Chart courtesy of StockCharts.com

The indicator highlighted on this chart is the 200-day moving average.

The 200-day moving average acts as a dividing line that separates bullish stocks from bearish ones. Trading above the 200-day moving average suggests that a stock is bullish, while trading below it suggests that a stock is bearish.

ENDP stock first broke below the 200-day moving average in August 2015, and it remained below it until June 2018, when the stock was finally able to regain its footing above that level.

This move above the 200-day moving average coincided with all of the other signals that I have outlined. These signals suggest that the trend toward lower prices has run its course and that Endo Pharmaceuticals stock has finally found a bottom.

Analyst Take

I firmly believe that Endo Pharmaceuticals stock has finally put in a bottom. This belief is based on a number of technical indications that are all suggesting the same thing, which is that ENDP stock is no longer primed for lower prices.