Sunedison Inc (NYSE:SUNE) has taken a steep nose dive on persistent selling pressure since the end of July. The chart below, which displays the monthly, weekly and daily time frames for comparison, makes that stark reality evident as the stock has lost ten-months worth of gains in less than a month!
Let's just focus on the volume for a moment. There are just over 315 million common shares outstanding for SUNE; yesterday alone, 58.5 million shares changed hands—nearly three times the average daily trading volume of 20 million shares. Last Thursday and Friday combined, a total of over 150 million shares changed hands. This is truly a jaw dropping collapse on extreme bearish sentiment.
On July 20th, 2015, just over three weeks ago, SUNE traded as high as $33.45. Yesterday, SUNE closed at $13.35, representing an over $20 fall since the recent high. There are various fundamental reasons for this sell off, but I won't go into them since I'd like to focus on the chart and price action.
SUNE is currently trading below its lower Bollinger Band® on the daily and weekly time frames. Should support be found at the lower Bollinger Band on the monthly chart, currently just under $13, then a dead cat bounce rally is favorable. This remains to be seen, however, so catching a falling knife is not advised.
The high turnover in shares is what truly piqued my interest, keeping in mind the number of shares outstanding. Assuming the selling pressure abates soon, a snap back rally could be quite the eye opener. I am noting the $18 and $22 levels as resistance areas to watch based off of historical congestion zones on the monthly and weekly charts.
Obviously, $18 would be the first level to focus on, assuming the bulls can regroup and get SUNE back above $15 for a push higher towards $16 with supporting volume. The 8-day volume weighted moving average currently sits at $17.41.