I received a reader request to take a look at the technicals of Groupon, so I figured I'd give the quick summary here as well as look for some more thoughts on what's going on with the company since it's nice to confirm the uptrend with some rationale.
Things are looking a little better in more recent times as the volume has picked up and the price is steadily making it’s way back north. I love stocks that move up steadily in a slow methodical way because they build a better base. This base keeps the bottom from falling out on a moment’s notice.
From what I see in the technicals is an ascending wedge that is reaching its apex. I’d use this pattern’s breakout as a clue as to the direction it is going to go. I’d also use the moving averages…dropping below these and a lower breakout of the pattern could be bad. I find it very interesting that On Balance Volume (OBV) has rocketed so high. Volume is a leading indicator and it is making new highs as the price has not yet. In a typical stock, I’d view this as extremely bullish. However, this was an IPO and it may be that there was not a lot of interest during the IPO. This is what is tough about analyzing IPO’s…because it leaves questions like this.
I've posted the charts and the rest of the discussion on Stockineer if you're interested in checking them out or adding your own two cents. Good luck on this one, hopefully the trend keeps continuing for you guys.
I updated the latest chart and posted it. Dropping below the 20 and 50 moving averages was the warning signal as it turns out. At this point you've got to be careful because not only were the moving averages violated but the lower trendline of the wedge was also violated. Unfortunately, this coincided with violations in the support levels of the indicators themselves. ...and the move down came on pretty heavy volume. I hope the charts help. I've got no position on the stock, I just don't want to see anyone get burned...I hope the price throws back to the trendline again...good luck.