Align Technology Hasn’t Lost Its Smile

For his final “Executive Decision” segment of Mad Money Thursday night, Jim Cramer checked in Joe Hogan, president and CEO of Align Technology (ALGN) , the orthodontics supplier.

ALGN just posted 62% revenue growth with better-than-expected earnings. The shares, however, fell 1.4%, a move Cramer called a mistake.

Hogan said digital orthodontics have been a game changer for the industry. He said nearly 75% of all adults have an alignment issue that could be rectified by Align.

Align has been a life-saver for many dental offices, Hogan noted. As patients dwindled during the pandemic, Align’s products were able to augment declining revenues.

Align is investing heavily into research and development, Hogan said. The company uses artificial intelligence algorithms to help determine the best way to move teeth to where they need to go and the company is also offering remote monitoring services to help patients avoid some trips to the dentist’s office.

We looked at the charts of ALGN just last week and wrote that “The charts and indicators of ALGN are bullish. Traders can continue to hold prior longs and new longs or additional longs could be bought at current levels. A $570 stop is recommended. The round number of $700 and then the Point and Figure target of $821 are our price targets.”

Let’s check out the charts again to see if there might be a reversal happening.

In the daily bar chart of ALGN, below, we can see that the shares made a key reversal day on Thursday — prices made a new high for the move up but closed significantly lower. The slopes of the 50-day moving average line and the 200-day moving average line are still positive.

The On-Balance-Volume (OBV) line shows a slight turn to the downside indicating that sellers of ALGN are more aggressive. This might be a one and done event or the start of a new trend. The Moving Average Convergence Divergence (MACD) oscillator has narrowed but it has not yet crossed to the downside.

In the weekly Japanese candlestick chart of ALGN, below, we can see a large upper shadow as traders rejected the new highs Thursday. The slope of the 40-week moving average line is still very positive.

The OBV line has been weakening for the past four months. The MACD oscillator is pointed down but has been narrowing towards a new buy signal.

In this daily Point and Figure chart of ALGN, below, we can see a potential upside price target in the $821 area. A trade at $584.08 would be a new low for the move down and is likely to weaken the chart should it develop.

In this weekly Point and Figure chart of ALGN, below, we can see a potential longer-term price target in the $943 area.

Bottom-line strategy: ALGN made a bearish key reversal Thursday but there is no follow-through selling. If Thursday’s price action kick started a downtrend it would be bearish but it has not happened thus far. Traders who are long ALGN from earlier recommendations should continue to hold those positions with our suggestion of a stop loss at $570. The $821 area is our price objective.

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