EarningsBeats Digest

Published: Wed, 12/29/21

EarningsBeats.com Digest for December 29, 2021

The Key Steps to Resuming an Uptrend

I talk often about "reclaiming the 20-day EMA". I simply mean trading back above the 20-day EMA. An uptrend typically is comprised of higher highs and higher lows, with the 20-day EMA acting as key support. Then the rise will eventually run out of momentum, printing a negative divergence. That can start a downtrend. To give you an example, let's look at the current chart of DexCom Inc. (DXCM):

From May through September, there was a series of new price highs and lows and the top didn't surface until after a negative divergence emerged. Then we saw a 50-day EMA and PPO centerline test (pink arrows) before the uptrend resumed. While the latest rally resulted in a slight break above the 20-day EMA, DXCM never was able to clear the prior high. Yesterday, DXCM took another tumble. I'd remain very cautious DXCM until we can clear the overhead price resistance and the 50-day SMA.

Happy Trading!

Tom Bowley
Chief Market Strategist

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