NEW YORK (TheStreet) -- After almost three straight days of gains this week, Pandora (P) is bumping up against heavy resistance near its declining 200-day moving average. A pullback may be ahead before the stock can extend Friday's breakout move.
Pandora's stock surged almost 15% on Friday after the company reported better-than-expected results for the second quarter. The stock opened the session with a huge upside gap and finished the day at new July highs on its heaviest upside trading of 2015. The powerful news-inspired breakout move was a sharp reversal from earlier in the week, when the shares closed at fresh 52-week lows on Monday.
With this week's gains, Pandora is now up over 25% from last week's low. In the near term, the eight-day rally has become a bit extended. With momentum beginning to ease as a heavy 200-day moving average comes into play, a consolidation appears to be in the cards.
A pullback before the $17.50 area is convincingly cleared would be a healthy event and give patient bulls a lower-risk entry point. Fortunately, the recent rally has left behind layers of support.
Last week's high at $16.47 marks the initial layer of support. Just below is the initial July high at $15.78, a level that also represents a one-third retracement of the huge rally off this month's lows. Investors should focus on that area for new or additional purchases.
A close below the Friday low at $15.16 would be a clear warning sign that the 200-day, which Pandora hasn't violated since July of last year, remains extremely heavy.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stock mentioned.