SanDisk (SNDK) is a classic tech name in the digital storage space, where they have been a major player for more than 25 years. Their flash memory technologies are used by huge data centers around the world and come embedded in smartphones, tablets, and laptops. If you’ve ever been to a tradeshow or conference, you also know that they make lots and lots of flash drives. SanDisk is also a massive innovator in Silicon Valley, with 5,000 patents worldwide and ongoing research into 3-D memory.
They recently posted some great earnings number and a positive outlook for 2015. The chart has revealed its hand, and from the looks of it, SanDisk has the makings of a big move coming. We can see below the strong rally that ensued following the decline from the $102 level. The stock corrected 20% to put it at bear market levels, yet the ensuing rally was so massive and widespread it took everything with it, SanDisk included.
The stock has nearly recovered all that was lost during that three week time period in October, and it now shows a deep cup/handle pattern after a low level base/consolidation. The breakout last week tells us that there are buyers interested in the stock at this level. The downtrend line comes in just above $100, and it’s sliding lower each day, so we will be near a decision point soon for the stock. The rising RSI is a benefit here, as SanDisk shows some staying power, and there has been some tremendous call flow recently, all bullish.
If it can move above the trend line, the stock should fill the gap at $105 and move onto new highs. It won’t be quick and easy, so our options trade is a January $100 call.
