NEW YORK (TheStreet) -- EMC (EMC) opened Wednesday's session slightly lower and, shortly after, put in new 52-week lows. Once investors were able to digest the company's latest earnings report, which included $1 billion in cost cuts, the flat action began to reverse. EMC surged 3% as a buying wave lifted the stock from its early low. At midday, the stock is stabilizing with a 2.5% gain, leaving behind a major support area in the process.
Heading into Wednesday morning's earnings news, EMC was in full retreat. On June 24, the stock made an attempt to take out heavy resistance near its April/initial June highs. With a heavy 200-day moving average overhead, the bulls lacked enthusiasm. The result was a downside reversal the following day that sparked a steep selloff.
A week later, and throughout early July, EMC held the May low, but dip buyers remained on the sidelines despite key support nearby. Last Monday the stock was hit with negative news from Greenlight Capital as well as a pair of downgrades. The high-volume flush that followed dropped shares over 3%.
The July 14 flush pushed EMC back down to a key support zone. This area includes the stock's March 2015 low at $25.05 as well as an important low reached in April of last year at $24.90. The stock held this area last week but appeared headed for a breakdown as Wednesday's earnings report neared.
Instead, EMC has managed a powerful reversal off this zone and may soon mount a healthy rebound. In the near term, the stock should be considered a low-risk buy in the $25.25-to-$24.50 area.
A close below $24 would indicate more downside will be needed before EMC can build a solid base. The stock will likely face considerable resistance near the May/June lows at $26 in the near term, but once through, EMC will have cleared a big hurdle.