A little over three weeks ago, I penned some bullish thoughts on Diamond Foods, Inc. (NASDAQ:DMND), suggesting that the company itself was ripe for a turnaround, and that the stock's near-term technical shape suggested it too was poised for better days. All DMND needed to do was fight its way above the upper (and falling) side of a wedge pattern that had been developing since November.
It was a premise that, judging from the public's feedback, wasn't well received. It seems few others felt Diamond Foods was ripe for the same rebound I saw. It also seems few thought that stock had a prayer of going any direction but down. That's what made what happened later in the day so sweet.
Yep, DMND did end up blasting past that upper edge of the triangle shape... in spades. In fact, I'd be the first to confess the move was a little too strong, leaving the chart nowhere to go, except lower, if only to burn off all that overbought pressure.
And it did. Shares of Diamond Foods, Inc. fell from that day's close of $16.60 to a low of $14.62 just a couple of weeks later. The bullish blow had been dealt though - the buyers tipped their willing hands. And sure enough, that dip was a buying opportunity. DMND has rallied nearly another three points, since then, attacking the 200-day moving average line with today's big burst.
It's bullish, though I've got a feeling today's hot move is also ultimately going to end the same way the one from mid-February did... with a pullback. But, as compelling as that first move from DMND was in the bigger picture, this second one pretty much seals the deal - the bulls are serious here, and aren't going to let it slide back very far. Ergo, it's a "buy on the dips" situation.
The most encouraging part about this whole story isn't the chart though - the chart's simply reflecting what's going in with investors' perceptions. The media has finally started to talk about turnaround potential with Diamond Foods, en masse. Things being what they are, the more it's talked about, the more it gets talked about. The buzz has started to reach that self-feeding critical mass. Though that optimism may not keep the stock completely propped up after today's big move, it does suggest the next pullback is apt to result in another salvo of buying.