Sunedison Inc: SUNE Stock Is Charging Up

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Shares of solar energy company Sunedison Inc (NYSE:SUNE) rallied Wednesday on the back of news that CEO Ahmad Chatila bought 32,000 shares. SUNE stock, which is higher by about 18% year-to-date, has seen much more orderly trading this year than the broader market and increasingly looks prepared to make a better break to the upside.

beat the bell stock investing adviceAfter the close of trading Feb. 18, Sunedison reported mixed fourth-quarter earnings. SUNE’s top line came in at $625.5 million, below the $683.50 million expected by analysts, but reported a loss of 16 cents per share that was better than expected 33-cent deficit.

The next day, SUNE stock saw a fairly wide intraday swing that, after all was said and done, left shares flat for the day. But buying started over the next few days, pushing SUNE to a well-defined resistance level that it has been consolidating from since.

SUNE Stock Charts

Looking at the multiyear weekly chart we note that after Sunedison stock dropped below a big-picture support line in 2011 (red dotted line), it began building a big, round base that ultimately pushed the stock back above the red line by November 2013. SUNE then began a big rally that ended in July 2014 when the big drop in oil prices began weighing on anything energy-related.

SUNE stock found a bottom in October 2014 and began a swift recovery, which also marks those October 2014 lows as pivotal higher lows that are pushing Sunedison against its 2014 highs around the $23-$24 area.

From this perspective, sooner or later SUNE stock will be ready to release higher.

sune stock charts weekly
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Zooming in on the daily chart, we see a well-defined band of resistance (blue box) that stretches back to last summer. Resistance is rarely a to-the-penny thing, but rather an area that a stock must clear. And the more often a stock bumps into a resistance/support area, the more forceful and lasting an eventual breakout/breakdown move will likely be.

For SUNE stock, since last summer it has now tried to push past the $23-$24 area four times, but so far has not yet succeeded a lasting breakout. However, the price action over the past few months has provided more promising signs that a breakout could be in the offing.

The consolidation phase from December into early February led SUNE to rally into resistance, and the last couple of weeks of consolidation has been taking place right below horizontal resistance. This also has shaped what we could refer to as a bullish pennant pattern.

sune stock charts daily
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The setup is straightforward: A daily close above $23.50 could set up a trade for SUNE to rise into the $25 area as a next and near-term upside target.

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Download Serge’s trading plan in the Essence of Swing Trading e-book here. As of this writing, he did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/03/sunedison-inc-sune-stock-charged-up/.

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