Chart of the Day: Axon's Technicals Could Get Charged Up After Earnings

Here come the earnings from Axon Enterprise (AXON) , which always seem to catch the market off guard. When investors and traders are looking for upside, they tend to be disappointed. The same happens when pricing in a shortfall — the short sellers tend to get smoked. This time around it appears both sides are staying back, preferring to wait for the results before making a move.

The stock has a tendency for very large gaps up and down post earnings; that was the case in February with a massive gap higher but the stock failed to advance and instead just fell on its own sword. Of course, we knew at the time Axon was not in an uptrend (the candles were amber color, see arrow in top pane).

Over the last several weeks the stock has been flat-lining. We could say building a base, but actually it seems more like apathy. The price range has been tight, traders not wanting to buy above $400 but not sell below $385. We'll learn more about their behavior after the earnings release on Wednesday.

Money Flow at the bottom of the chart is still bearish. The moving average convergence divergence, meanwhile, in the second pane on the chart, is on a buy signal. The Average Directional Index, as seen in the fourth pane, is clearly headed lower, while the Stochastics (momentum) is showing no energy. The chart is not giving us much information other than it is not pricing in too much excitement, and that means we could have something big after the report over the following days or weeks, but not necessarily the following day.

We like Axon Enterprise in the Pro Portfolio and rate it a one, buy at anytime.

The Pro Portfolio is long AXON.