NEW YORK (TheStreet) -- VeriFone (PAY) , the provider of point-of-sale devices for almost every type of debit and credit card transaction, has had an extremely volatile ride since the crash of 2008. At that point, the stock became an "option on survival," trading as low as $2.31 per share in November 2008.
Survive it did. Here's how to trade VeriFone based on technical analysis, including its negative chart divergences.
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Here's the daily chart for VeriFone.
Courtesy of MetaStock Xenith
The daily chart for VeriFone shows the rebound from the June 2013 low at $15.34 to the June 2014 high at $38.26 and the volatility since then. The stock has been below its 200-day simple moving average (green line) at $34.43 since Friday which is a technical warning in front of the earnings rew2port released after the closing bell on Monday.
From 2008, VeriFone shares surged 25-fold to an all-time intraday high at $58.88 into April 2011. The stock shifted from survival mode and became a popular momentum stock as the global economic recovery increased demand for payment devices from financial institutions, payment processors, retailers, government entities and health care providers.
The stock then lost its momentum status and experienced an extremely volatile ride, trading as low as $15.34 into June 2013. Problems that caused this decline began on Feb. 21, 2013, when the stock plunged 43% in one day after the company warned that global sales would be much lower than expected. The decline to the low accelerated after the company missed second-quarter 2013 earnings, reported on June 5, 2013.
From the January 2013 high at $36.13 to the June 2013 low at $15.34, the plunge was 58%.
Moving into 2014, shares of VeriFone rebounded 149% from the June 2013 low to as high as $38.26 on June 17, 2014. Since then, the stock declined 26% to as low as $28.18 into Oct. 15, then rebounded of 34% to as high as $37.84 into Nov. 5.
This is the volatility background investors must navigate this week after VeriFone reports quarter results after the closing bell on Monday. Guidance will be a key both for the company and strength of the global economy.
Here's the weekly chart for VeriFone.
Courtesy of MetaStock XenithThe weekly chart for VeriFone shows that the stock rose from being an "option on survival" in November 2008 to a momentum stock in August 2010, when shares surged above its 200-week simple moving average (green line), then at $21.33.
In February 2013, the stock plunged 43% in one day below its 200-week SMA, then at $30.19, before bottoming in June 2013 at $15.34.
The weekly chart is negative, with the stock below its key weekly moving average at $34.06 and its 200-week SMA at $35.01, which is a pre-earnings warning. The momentum reading shown in red at the bottom of the graph is declining to 74.64 from 77.61, stalling below the overbought threshold at 80.00.
Investors looking to buy VeriFone on weakness should enter a "good 'til canceled" limit order to buy weakness to a key technical level at $28.95.
Investors looking to sell VeriFone should enter a "good 'til canceled" limit order to sell strength to a key technical level at $47.15.
TheStreet Ratings team rates VERIFONE SYSTEMS INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate VERIFONE SYSTEMS INC (PAY) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share."
You can view the full analysis from the report here: PAY Ratings Report