Autodesk Is Gearing Up for a Pullback
NEW YORK (TheStreet) -- Autodesk (ADSK) - Get Report zoomed to a 9% gain on Friday, the sixth straight session in its winning streak. Shares began to ramp right after the opening bell, and the stock saw its heaviest upside volume in over a year. This powerful move has lifted shares more than 21% over the last six sessions. With heavy resistance beginning to come into play, patient investors can expect a healthy pullback soon.
Back on Oct. 2, Autodesk opened with a downside gap that dropped it to fresh 2015 lows. At the early lows that day, the stock was off more than 35% from its 2015 peak and was in the process of putting in a divergent low in its moving average convergence/divergence indicator. During the August selloff, Autodesk registered its deepest oversold MACD reading since the 2011 lows. In early October, as the stock marked its sixth straight lower monthly low, a higher low in the MACD was in place. Once shares turned higher, which began with a powerful key upside reversal on Oct. 2, the momentum change was dramatic.
The impressive rebound off the lows has carried Autodesk back up to to a heavy resistance zone. This area includes an overhead trend line that links both the April and August highs as well as the huge breakdown gap left behind back on Aug. 24. Autodesk fell more than 4.5% on its heaviest downside trade in over a year that day. Less than two weeks later, the stock was falling below its 2014 low. This resistance zone, between $51.75 and $52, will likely hold shares back in the near term.
Considering the nearly straight up move over the last six sessions, a healthily pullback will be needed soon. For patient bulls, a light-volume fade will offer a low-risk entry opportunity. An area to keep an eye on is between $49 and $47.90. This key zone includes Autodesk's 50-day moving average as well as the September high. A retest of the September peak, just below $48, would equal a one-third retracement of the early October surge.
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Disclosure: This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.









