VEEV Stock: No Overhead Resistance
Veeva Systems Inc (NYSE:VEEV) stock has been playing out just as expected. These expectations were laid out in a publication on April 11, titled “With No Resistance in Sight, Veeva Stock Is Set to Appreciate.” Just as the title describes, I had reason to believe, based on the method of investment analysis I employ, that VEEV stock was set to appreciate.
At the time of that previous publication, this investment was trading at $51.52. It is currently trading at $66.82. This represents an impressive return of 29.69% in a matter of seven weeks, and the good news is that I happen to believe that higher prices are still likely.
Before I continue, it is worth noting that my views on Veeva stock have been generated by analyzing the company’s stock chart. This method of investment analysis is known as technical analysis, and it is predicated on using historical price and volume data to forecast the stock price’s future direction.
This may seem far-fetched, but I assure you it is not. This method provides a great deal of value, and I have had great success by applying this method to my trading strategies. I am so enamored by this method that I have spent nearly two decades studying and applying this method of analysis.
The following Veeva stock chart illustrates the bullish indications that supported my bullish view on this investment.
Chart courtesy of StockCharts.com
In my April publication on VEEV stock, I outlined the fact that this stock had created a bullish trend that was effectively captured by using a simple ascending channel. An ascending channel contains two trend lines that represent lower support and upper resistance. I outlined the fact that this bullish trend was sustainable as long as the stock prices remained confined to the channel.
My view on this investment was reinforced by the moving average convergence/divergence (MACD) indicator located in the lower panel of the price chart above. MACD is an indicator that uses signal-line crossings to distinguish between bullish and bearish momentum.
A bullish indication was generated in March of this year, which served to suggest that bullish momentum is governing the predominant direction that Veeva shares are trading in. This indicator creates an environment where the path of least resistance is tilted toward a higher stock price.
In May, the stock price exited this channel by breaking above resistance, implying that this orderly trend is now accelerating to the upside. The timing of this acceleration is not a mere coincidence, as the following Veeva stock chart will help illustrate.
Chart courtesy of StockCharts.com
The price chart above illustrates where my bullish view on VEEV stock was born. This price chart outlines how, in March of this year, the stock managed to breach its previous all time-high that was set in the second week this investment vehicle began trading publicly.
It has taken nearly three-and-a-half years to return and breach this level of resistance that was created in October 2013. Creating a new all-time high is a very special feat because, when it does occur, it means that there is little to no overhead resistance. Such a dynamic creates an environment where an investment is free to trade higher unabated.
New all-time highs have a tendency to cause the price of a stock to accelerate. This dynamic is created and fueled by the fact that when an all-time high is forged, every bullish investor is sitting with a profitable position, while any longstanding bears are sitting with losses. A bearish position contains the potential for unlimited losses and, as a result, higher stock prices will cause these bears to cover their short positions by buying back the stock.
In some extreme circumstances, margin clerks have to step in. This is why I made the point of saying that when the price broke above the orderly ascending channel in May, it was driven by Veeva stock breaking above the previous all-time high that was set nearly three-and-a-half years ago, shortly after it began trading publicly.
I have seen many great bullish runs begin after the initial high, set shortly after the company began trading, was finally overtaken. Names like Facebook Inc (NASDAQ:FB) stock come to mind, and Shopify Inc (NYSE:SHOP) stock was also one I identified in December 2016, and that investment has performed extremely well. At minimum, I am expecting this investment to test the $80.00 level. This objective was obtained by taking the depth of the pattern and extrapolating that value above the previous all-time high.
Bottom Line on Veeva Stock
VEEV stock has performed extremely well since my last publication, and there is little to suggest that this type of performance is going to end any time soon. My bullish views on Veeva stock are based on the company’s price chart, and therefore, my views are contingent on any new indications that are generated.