Will The Third Time Be A Charm?

SquareSpace Inc. (SQSP) has been in a fairly narrow trading range since gapping down in early September.

Support has been very consistent near the 27.50 level, while each rally stalls once it trades into its gap resistance zone. I do like the improving odds that SQSP is going to make a breakout stick fairly soon, though. Check out the AD line on this chart:

Enter SquareSpace Inc. (SQSP):

If we look at where the AD line was when SQSP ran into its 30.60-31.30 gap resistance the last 3 times, it's easy to see that the AD line has jumped significantly higher each time. It certainly sends a signal that institutions could be building a position in SQSP. Also, note the volume surge over the past two trading days. Instead of leaving a long tail to the upside, like it did back in October and November, SQSP closed on Thursday at 30.59 and near its high of the day. There's still work to be done to clear 31.30 gap resistance, but relative strength has been surging and is now at a 5-week high. We're also on the verge of a golden cross, with the 20-day EMA moving back above the 50-day SMA. The 20-day EMA has been below the 50-day SMA since mid-August. I would now view any test of the rising 20-day EMA to be a very solid entry point.

Happy Trading! Tom Bowley Chief Market Strategist EarningsBeats.com Better Timing. Better Trades.