With No Resistance in Sight, Veeva Stock Is Set to Appreciate
VEEV Stock: The Sky’s the Limit
When I stumbled upon Veeva Systems Inc (NYSE:VEEV) stock, I got really excited. The company, from a fundamental basis, is very compelling, and its valuation supports further gains because the company continues to grow at an exponential rate. Under most circumstances, this would be enough to get anyone excited about a potential investment, but this is not where my excitement is stemming from. I am bullish on the prospects of Veeva stock heading forward because of a particular characteristic that I found on the VEEV stock chart. This rare characteristic is really easy to spot, and I have seen tremendous price moves based off it.
I do respect fundamental analysis, but I have found that the use of technical analysis produces better results because the information is timely. Technical analysis is my preferred method of investment analysis. This method is based on the notion that historical price and volume data can be used to discern a trend and forecast future stock prices. I have been sharpening my skills in the method for nearly two decades and have become proficient in analyzing a price chart.
After a slow start to its trading career, Veeva shares began to make strides in early 2016 when bullish developments began to support an advance in the share price.
The following Veeva stock chart illustrates the technical developments that supported an advance.
Chart courtesy of StockCharts.com
The advancement off the lows that began in February 2016 is an excellent example of bullish price action. This bullish price action contains the quintessential characteristic of a bullish trend; higher highs followed by higher lows. This characteristic creates a stereotypical price chart that begins in the lower left and ends up in the upper right.
This bullish trend is very orderly and it is easily defined using an ascending channel. This ascending channel is created by using two parallel upward-sloping trend lines. The upper trend line represents resistance, while the lower trend line represents support. These two defining trend lines act to contain the price of VEEV stock as it trends towards higher prices.
The ascending channel is a great and easy way to define risk in this investment. As long as Veeva stock is contained within the ascending channel, I can only assume that higher prices are set to prevail. Breaking below the lower trend line would serve to suggest that the bullish trend towards higher prices had concluded and a larger correction was set to ensue.
The moving average convergence/divergence (MACD) indicator in the lower panel continues to support an advancing share price. MACD is a simple and effective trend-following momentum indicator that uses signal line crossings to distinguish between bullish and bearish momentum. This indicator has been instrumental in suggesting when the advance was set to accelerate.
A bullish cross was generated in March 2016, shortly after Veeva shares bottomed. This indicator served to suggest that bullish momentum was propelling VEEV stock, and as a result, the path of least resistance was geared towards higher prices. From March 2016 to October 2016, Veeva shares registered a 50% return before a bearish MACD cross halted the ascent.
A bullish MACD cross was once again generated in March 2017, serving to suggest that Veeva stock is set once again to advance. This advance has caused VEEV stock to surpass a very important milestone that was set a few short days after shares began to trade publicly.
The following Veeva stock chart illustrates the development on the price chart that caused me great excitement when I stumbled upon this investment.
Chart courtesy of StockCharts.com
The price chart above illustrates that Veeva shares have recently created a new all-time high. What makes this feat most impressive is that the standing high at $49.00 was created in the first week of trading after Veeva shares began to trade publicly. It took 3.5 years for price to return to this level and finally overcome it.
New all-time highs are important events because they indicate the price has surpassed all previous levels of price resistance, and shares are now free to trade higher. I have seen similar price charts play out, and once the previous all time-high was surpassed, the share price really began to accelerate. A good example is Facebook Inc (NASDAQ:FB) stock, where shareholders experienced a 213% return once the previous all-time high created around the initial public offering was finally taken out.
At minimum, I expect this price pattern to produce a price objective of $80.00. This objective was obtained by taking the depth of the price pattern below the previous all-time high and extrapolating it above it.
Bottom Line on Veeva Stock
I am bullish on Veeva stock because I have reason to believe that higher stock prices are likely. This belief was generated using indications on the VEEV stock chart. I will stick with my bullish view on Veeva shares until there are indications on the price chart that suggest another view is warranted.