Boston, MA 10/09/2013 (wallstreetpr) – Nuance Communications Inc. (NASDAQ:NUAN) (Closed: $18.13, Down: 1.95%) opened above the 3 day high on Tuesday but soon reversed and fell down to break the other end of the 3 day range to record a fresh 6 week low. The price action produced a huge Bearish Engulfing candle which was a Marubozu too, amplifying the bearishness of the trend. The jump in volume at 11 million against an average of 4 million only clearly reflected the intensity of the selloff.
The stock had surged to $22.56 by the end of 2007 from the 2006 low of $6.94 in just a 15 month period. The 2008 bear market took it back to the level last seen in November 2005, when the stock had made its debut in the exchange. From the 2008 bottom of $6.18, the stock rallied to a new high at $31.15 by early 2012 and started its next bear market.
In the fall from the 2012 top till now, we can see that every rise of 5 – 6 points have been used to sell the stock. The series of lower highs and lower lows continue unperturbed till now, emphasizing the inherent weakness of the stock despite the sharp rallies which have been countered by sharper drops.
The price is stuck in a range of $17.80 – $20 and the Tuesday fall has brought the price down to test the lower boundary of this range now. Moreover, the Tuesday low of $18.09 was made exactly on the major trendline connecting the 2010 bottom of $14.45, 2011 bottom of $15.56 and the 2013 bottom of $17.90. So a break of this major support zone of $17.80 – $18.10 could take the price to $16 – $16.90. The long term channel boundary is currently at $16 and below that, the last support zone is at $14 – $14.80.
