Digital Ally, Inc. Technicals: Stock Finds Support And Resistance Within 24-Hour Period

Shares of Digital Ally, Inc. DGLY pulled back hard after peaking out at $33.59 a little over three weeks ago.

In bottoming out at $15.07 Thursday, the stock retraced almost exactly 61.8 percent of the up move that took place from the mid-August low of $3.25 to the $33.59 high on September 2.

Since Thursday's low, Digital Ally gapped up Friday morning and has traded as high as $20.20, briefly eclipsing the long-term horizontal line resistance at $20.08.

The Technical Take

From a technical perspective, the stock could be going through the “b” wave higher of an “abc” downside correction.

The upside target of this “b” wave is very tough to determine at this point. However, technicians would say that Digital Ally can be bought as close to support (at $14.84) as possible in the hopes that the stock will run back up toward $25 or so.

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For those on such a long-side entry, technicians note that at least they'll be able to know when it's time to get stopped out if Digital Ally were to close below $14.84. The next support on the downside comes in at $11.49.

A Note Of Caution

In particular, short-selling Digital Ally shares appears to be an even more difficult proposition. The upside in a fundamentally-disconnected stock could, in theory, be limitless.

Extreme caution is therefore encouraged for those considering this strategy.