MDSO Stock: This Bullish Trend Has Legs
The markets are completely dismissing the potential impact that a trade war can have on an economy. As a proponent of price action, if the markets are not concerned with the prospects of a trade war at this current juncture, then I have no reason to be either.
With that potential stumbling block out of the equation, I can continue to focus on the raging bull market in stocks. If you do not know what I am talking about, just take a gander at the Nasdaq Composite Index. It has just forged a new all-time high, which is something indices do in a raging bull market.
I am focusing on Medidata Solutions Inc (NASDAQ:MDSO) stock because I believe Medidata Solutions stock is primed for further gains within this intense bull market.
My beliefs are based on a number of technical indications that continue to support MDSO stock. I will outline these indications and their implications below.
Chart courtesy of StockCharts.com
The MDSO stock chart illustrates that Medidata Solutions stock has been characterized by price action consisting of a series of higher highs and higher lows. This price action creates the stair-step pattern that bullish trends are so famous for.
I captured this bullish trend by connecting the troughs created by the series of higher lows. The end result was the uptrend line that has been annotated on the Medidata Solutions stock chart.
This bullish trend captured by the uptrend line has been responsible for taking MDSO stock from a low of $7.04 in August 2011 to where it currently stands at $87.07. This represents a 1,136.79% return in seven years.
The uptrend line not only captures the bullish trend, but also pinpoints where price support resides. This is very important information because as long as Medidata Solutions stock is trading north of this uptrend line, the bullish trend that began in August 2011 is still in development. Therefore, higher MDSO stock prices are likely to prevail.
This notion of a “bull market still in development” is being supported by an alternating wave structure and an influential momentum indicator. Both are highlighted on the following Medidata Solutions stock chart.
Chart courtesy of StockCharts.com
This MDSO stock chart illustrates that the bullish trend developing above the uptrend line has been supported by an alternating wave structure and an influential momentum indicator.
The alternating wave structure consists of consolidation waves and impulse waves.
Impulse waves capture the stage in a bullish trend when a stock makes a sustained move toward higher prices.
Consolidation waves capture the stage in a bullish trend when a stock corrects and digests the gains from the impulse wave that preceded it.
The corrective price action depicted by this wave is a necessary and important part of every bullish trend because it creates the requisite conditions so a new advancing impulse wave can follow.
These waves work together, feeding off each other, in order to create and sustain a bullish trend.
The bullish trend created by this wave structure has been supported by the moving average convergence/divergence (MACD) indicator.
MACD is an influential momentum indicator that uses the crossing of signal lines to determine whether bullish or bearish momentum is influencing the price action in a stock.
Bullish momentum implies that a stock is geared toward higher prices, while bearish momentum implies that a stock is geared toward lower prices.
This is pertinent information because a stock cannot sustain a move in either direction unless the applicable level of momentum is supporting it. This is why each impulse wave has coincided with a bullish MACD signal, and each consolidation wave has coincided with a bearish MACD signal.
The MACD indicator is currently in bullish alignment, supporting an impulse wave that is currently in development. These coinciding indications continue to suggest that higher MDSO stock prices are on the horizon, reinforcing that the bullish trend is still intact and in development.
I am bullish on Medidata Solutions stock because the technical indications on the MDSO stock chart continue to support the notion that higher stock prices are in development.
I will maintain a bullish bias as long as the MDSO stock price continues to trade north of the uptrend line. The caveat is that if the stock price ever breaks below the uptrend line, it would negate my bullish view.