KODK Stock: From Bearish to Bullish in a Blink of an Eye
It is not difficult to see that speculation is running rampant because the mention of words like “cryptocurrency” or “Blockchain” is causing stocks to appreciate by leaps and bounds. Blockchain is the technology behind Bitcoin and the mass of cryptocurrencies that have taken the world by storm.
Blockchain technology will change the face of this world as we know it, that I am convinced of, but in what way is not exactly yet clear. Presently, there is a lot of enthusiasm geared toward this sector and the mere mention of these buzzwords is causing investors to pounce. The latest participant benefiting from this appetite for blockchain and cryptocurrencies is Eastman Kodak Company (NYSE: KODK) stock.
On January 9, 2018, Kodak announced that it was partnering with WENN Digital to launch its own cryptocurrency and blockchain initiative. This news caused the Kodak stock price to surge higher by 246.16% in a couple days. This move came on the heels of a KODK stock price that was forging new all-time lows, where the future seemed bleak. In the blink of an eye, that all changed for this company.
This price action that followed the bullish announcement has done a number on the KODK stock chart. I am going to outline the technical developments that have just occurred on the company’s stock chart and their implications.
The following stock chart illustrates the development that occurred following the announcement that Kodak is creating a cryptocurrency and blockchain initiative.
Chart courtesy of StockCharts.com
KODK stock surged by an incredible amount in only two trading days and in the process, the stock price breached the 200-day moving average. The 200-day moving average is an indicator that is created by averaging the stock’s closing price over the past 200 days and plotting that value on the stock chart.
The 200-day moving average acts like a dividing line that separates bullish investments from bearish ones. Distinguishing between these two polar opposites is as easy as determining which side of the 200-day moving average the stock is trading on. A stock trading above the 200-day moving average is bullish and one trading below it is bearish.
Kodak stock is currently trading above the 200-day moving average, suggesting that this stock is in a bullish state. I do not take this indication lightly because the last time KODK stock regained its footing above this metric was in May 2016, and the stock price went on to appreciate by 39.31%. Now that it is trading above this metric once again, I will carry a bullish view on this stock as long as it remains above it.
The relative strength indicator (RSI), which is located in the upper panel, is an oscillator used to measure whether a stock is overbought or oversold. A reading above 70 is overbought, while a reading below 30 is oversold.
Currently, the RSI is at 73.55, which is an overbought indication. As long as it remains above 70, this indication is embedded, and an embedded RSI suggests that higher stock prices are on the horizon. If this indicator closes below 70, it would suggest that this initial surge toward higher stock prices has run its course and a correction is set to ensue.
It is difficult to say whether or not KODK stock will remain embedded above a 70 RSI, but as long as the stock price remains north of the 200-day moving average, I feel confident in saying that there has been a substantial change in the outlook for Kodak stock. At one moment, it was hovering along its lows, and in one swift move, higher prices have prevailed and a bullish outlook has been born.
In the aftermath of the bullish news surrounding Kodak stock’s venture into blockchain and cryptocurrencies, the stock price has appreciated to such a degree that the outlook for KODK stock has changed. As a result, a bullish view on this investment is warranted with the caveat that the stock price remains above the 200-day moving average.