What we can see on the chart above is TQNT was in a long term giant Head & Shoulders chart pattern, and in early October it finally bottomed out and began a new trend upwards. What happened last night was a event driven, fear induced panic, that made people all blow out simultaneously. In reality a 10-15% pull back would have been a understandable behavioral reaction.....but 26%? Definitely way to oversold.
What we can see is:
- Massive sell off occurred on high volume. Generally after a giant down day like this, many traders and investors will come up and snag a bunch of shares at a discount price (in their mind) and will help retrace some of the losses from the prior trading session.
- Volatility: Any 30% price move in one day, will eventually lead to a mean reversion to moving averages or linear regression lines. This event is not that serious that it wont recover from this behavioral sell off.
- The Professionals: Best believe Market Makers, Hedge Fund Managers, Professional Equity Traders will come in and accumulate this stock for a easy 10-15% pop upwards in the next coming weeks.
Above: Linear Regression Analysis.
- Above we can see that TQNT is trading well below its linear regression levels by at least .45 cents a share. We can fully expect to see a reversion to that mean of 5.80 within a few weeks at the latest.
- 60 day Lin-Reg line is at $5.80 Per Share
- 30 day Lin-Reg line & Lin-MA is at $7 Per Share
Above: Mean Reversion Analysis Using Simple Moving Averages
- All moving averages suggest a reversion back to the mean target range of $6.25 Per Share on a monthly basis & $7.00 Per Share on a Weekly Basis.
- Realistically longer ranging Moving Averages are more accurate after short term event fluctuations.
In the end TQNT may have some issues, but its appears to be very oversold at this point, i believe it bouncing back to 6.50-7 within a month is not a unreasonable assumption and should come to fruition. But with the market acting the way it is nowadays, anything can happen.
Position: Long TQNT
