Compelling Setup in Ellie Mae

Government regulation is often cited as a primary concern for business. So a company with a business model that addresses this concern and has a good-looking chart offers a trading opportunity. Ellie Mae (ELLI) provides software and cloud computing for the mortgage industry; specifically, its products help customers handle government regulation and compliance issues.

Ellie Mae (ELLI) -- Weekly Source: View Chart » View in New Window »

The stock had a tremendous run in 2012, up more than 400%, but retraced a substantial amount of that gain in in January of this year. Since then, it has been attempting to stabilize above the $19 level, allowing time for the technical indicators on the weekly chart to turn positive. The relative strength indicator is crossing above its centerline and stochastics has made a bullish crossover and moved out of an oversold condition. Volume ramped up during the sell-off earlier in the year, and has dropped off as the stock price attempts to consolidate. Accumulation/distribution and Chaikin Money Flow are crossing above their 21-period averages, indicating a greater percentage of the modest volume is to the buy-side....187 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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