Technology services company, Equifax Inc. (EFX) is one trendy company. And by trendy in this case I am referring to the stock’s stellar up-trend that dates back to October 2011. After a good run off its 2009 lows, the stock chopped back and forth until in February 2012 it gained enough momentum to blast past a multi-year area of resistance around the $40 mark. From there there was no stopping the stock as trend followers, growth investors, and others jumped on board until it found a more recent top in May 2013.
On the longer-term chart below note that the stock never broke below its trend line, which has been in place since the beginning of this latest rally leg in October 2011. Not so coincidentally, given the correlation among stocks, October 2011 also happened to be an important low for the broader US stock market.
From October 2011 to May 2012 the stock rose more than 100%, yet unlike other stocks with steep ascents, Equifax Inc. (EFX) continually retraced back to the aforementioned up-trend as well as its 100 day simple moving average (blue line). In other words, despite several occurrences where the stock took its slope vertical over the past two years, it appears to have an equally healthy appetite for so called mean-reversion moves. From a trader’s point of view, this makes me more comfortable playing the stock from the long side, knowing that a large gap-down risk is thus somewhat lessened.
Closer up on the chart, Equifax Inc. (EFX) on June 24th, again with the broader market, bounced off its 100 day simple moving average. This set the stage for a steep rally which last Thursday, July 25th led the stock to break past lateral resistance around $61.50. Yesterday the stock showed strong follow-through buying, which now looks to be able to push the stock toward the mid to high $60s over the ensuing months.