SODA Stock: Without a Doubt
Sodastream International Ltd (NASDAQ:SODA) announced earnings that beat on both on the top and bottom line.
Sodastream reported earnings of $0.69 vs. expectations of $0.24 and revenues of $124.2 million vs. consensus estimates of $116.5 million. This sent the price of SODA stock soaring 13.94%. This positive event is acting as the catalyst that has resolved my clouded view on SODA stock. I can safely say that I no longer have mixed emotions on SODA stock.
In my last article, I was conflicted because, when I looked at the SODA stock chart from different time frames, I was getting mixed messages. One chart was very bullish while the other chart had ominous implications. As a result, I refrained from taking a side, and I stood by a neutral position. This has now changed, as the price action that followed earnings has effectively abolished any mixed views I had on SODA stock, and the sinister-looking chart has been put to bed.
I am now bullish on SODA stock and I believe the stock is free to move higher, as the path of least resistance is higher.
The following SODA stock chart illustrates the bullish price action that supported further gains.
Chart courtesy of StockCharts.com
In May 2016, SODA stock generated a golden cross. 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). This signal is used to confirm that a bull market is on the horizon. It was the first signal that confirmed a trend reversal was in play.
The price action off of the February lows served to suggest that a bullish trend was developing, and the bullish price action that began as an impulse wave (highlighted in green) was followed up by a consolidation wave (highlighted in purple). These waves continued to dominate the landscape as each wave flowed into the next ,and the price continued to rise. This is the definition of a bullish price action, as higher highs and higher lows encompass the trend, and the trend moves from the lower left to the upper right.
The following SODA stock chart was the cause of my mixed emotions.
Chart courtesy of StockCharts.com
The double top that is highlighted in pink was the bearish pattern that projected a price objective of zero. It was this pattern that gave me great anxiety as the price approached this horizontal level of resistance. I had originally referred to this chart as sinister.
This horizontal level of resistance was once a level of support and, when SodaStream stock fell below this price level, it confirmed that further bearish price action would continue. I had fears that SODA stock would get rejected by this level as it tests it from beneath.
Now that SODA stock is trading above the horizontal level of resistance, all my anxieties surrounding this pattern have been put to rest. My bearish beliefs are now effectively eliminated. If a correction were to take place, I would be looking at this level to act as a level of price support.
Now that the picture has become clear, there is a new level of resistance that SODA stock traders will be eyeing. This level sits at the all-time high, where I believed a double top was created. This level sits at $75.00, and would represent a potential return of 130% from current levels.
Bottom Line on SODA Stock
I an now bullish on SodaStream stock, as the picture is no longer clouded and all indications are now pointing up. My analysis was based on the signals that were generated on the SODA stock chart and, as long as they are bullish, so too will my bias.