Ideanomics (NASDAQ:IDEX) stock has been trying to find its footing lately.
Although this penny stock has struggled for a number of years. IDEX stock is up 44% so far this year and more than 600% over the past 12 months.
However, it’s down almost 50% from its 52-week highs. So clearly there is a bit of a mixed picture with this stock.
Shares peaked in mid-February, which is about the time that other speculative and high-growth stocks topped out.
These groups then slipped into a painful bear market. Some of these stocks fell 30% to 40%. Others fell more than 70%.
While we’ve seen the potential reward with a name like IDEX stock — rallying more than 1,200% at one point during the past year — the recent bear market is a painful reminder of how quickly things can change. It also reiterates why using discipline is so important.
Trading IDEX Stock
First off, penny stocks are not for everyone. While many investors may look at Sprint, Bank of America (NYSE:BAC), Advanced Micro Devices (NASDAQ:AMD) and other stocks that traded at sub-$5 levels, not every penny stock is the future AMD.
The simple truth is, most of these stocks trade below $5 for a reason — and it’s not good.
For every AMD or BofA, there are likely a dozen penny stocks that go defunct and end up on the pink sheets. I’m not saying IDEX stock is either the next AMD or heading for over-the-counter trading. I am saying that ignoring its speculative nature is a mistake.
With that said, there are some positives on the chart.
Specifically, shares gave us a nice double-bottom at $2.25, while also holding up over the 200-day moving average. After successfully holding these marks, the stock then pushed through the 10-day, 21-day and 50-day moving averages, as well as downtrend resistance (blue line).
That last measure — downtrend resistance — has been a weight on the stock for several months. It’s not out of the woods quite yet, but to see shares above this measure is constructive and encouraging.
IDEX stock topped out near $5.50 in February before cascading lower. $3.50 failed to act as support, then turned to resistance.
If shares can push through the 21-week moving average, then $3.50 becomes next upside target for the bulls. Above $3.50 and a push to $5-plus could be possible. Keep in mind, the $5.50 to $6 area has been multi-year resistance for this name.
On the downside, a break of the 50-day moving average is not good. It could put IDEX stock back below downtrend resistance and set the stage for a retest of the $2.25 level and the 200-day moving average.
Bottom Line on Ideanomics
Ideanomics was a financial technology — FinTech — company based out of NYC. Now it’s focused on EVs. The company was founded by Shane McMahon as China Broadband Inc., then again in 2017 by Bruno Wu. McMahon now serves as the company’s chairman.
The company has run into some issues, though. After several name changes, it’s also changed its direction. Ideanomics went from focusing on financial services to the electric vehicle sector.
Now its erratic tale as a penny stock makes a bit more sense.
The bottom line with this one is pretty simple: I wouldn’t sink my life savings into IDEX stock. However, that doesn’t mean it can’t be traded as a spec play.
Currently, that’s the only way I would look at Ideanomics, and even for many investors, that will be too aggressive.
Keep the technicals in mind and remember the risk that comes with spec plays.
On the date of publication, Bret Kenwell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.