inTest's 8.9% Rally: Breakout or Fakeout?

Shares of inTest closed at $8.72 on January 15, up 8.9% on volume of 111.3K shares. That's a decisive move, but the real story is in the levels. The stock punched through its immediate ceiling, hitting a high of $8.7795 intraday. That level is now the key resistance to watch. Below it, the low of $8.09 from the same session marks the primary support-a level the price has tested hard before.

This isn't a minor bounce. The rally broke out of a clear congestion zone, with the high of $8.7795 acting as the ceiling for weeks. The immediate target for bulls is the 50-day moving average, which sits around $9.00. A clean break above that would signal a shift in momentum, with the 200-day moving average as the next major hurdle.

The sustainability of this breakout hinges on two factors: volume and follow-through. The volume spike to 111.3K shares is encouraging, showing conviction. But the price action shows a classic pattern-rallying hard to test resistance, then pulling back to close near the top of the range. The setup is bullish, but the market is testing the strength of the new buyers. Hold above $8.7795 with sustained volume, and the path to $9.00 opens. A failure to hold that high could signal this was just a fakeout.

The Momentum: Volume Profile and Trend Integrity

The rally isn't just a pop; it's a volume-driven breakout with building momentum. The 8.9% gain on 111.3K shares is a clear spike, showing strong buyer conviction at the breakout level. This isn't a quiet move-it's a statement that new money is stepping in to challenge the old resistance.

That conviction is extending the trend. The stock's four-week gain has now hit 8.9%, a solid move from a low base near $7.40. This isn't a one-day wonder; it's a sustained climb that has already cleared the initial congestion. The volume profile supports this-buyers have been active enough to push the price through multiple resistance levels over the past month.

The key watchpoint for trend integrity is now the $8.70 area. A pullback below that level would signal weak follow-through and potential exhaustion. The price has already tested $8.7795, the high of the session, and closed near the top of the range. For the uptrend to hold, we need to see the price hold above $8.70 on the way back to the next major hurdle: the 50-day moving average around $9.00.

The setup is bullish, but the market is testing the strength of the new buyers. The volume spike confirms the breakout, and the extended gain shows momentum is building. The critical level to watch is $8.70. Hold above it, and the path to $9.00 opens. A failure to hold that high could signal this was just a fakeout.

The Catalyst: Earnings and Order Flow

The rally has a clear fundamental driver: a massive earnings beat is expected for the upcoming report. The market is pricing in a 75% year-over-year jump in EPS to $0.21 per share. That's a huge number, and it's the kind of headline that can fuel a breakout. But the real story behind the numbers is more nuanced, and it's where the technical setup meets the business reality.

On the surface, the order flow is bullish. For the third quarter, orders surged 34.2% year-over-year to $37.6 million. That's the strongest demand signal, showing new customers are coming in and existing ones are expanding. The growth was broad-based, hitting auto/EV, defense, and semi markets. The backlog also jumped, increasing by $11.4 million to $49.3 million. This is the kind of order book expansion that sets up future revenue growth.

The critical divergence, however, is in the revenue line. For that same quarter, revenue fell 13.3% year-over-year to $26.2 million. The reason? Late-quarter shipment delays that have since been resolved. This gap between strong order intake and weaker revenue realization is the fundamental headwind that needs resolution. It's a classic inventory and execution lag that can pressure margins and cash flow in the near term.

So the setup is a bullish order story with a fundamental headwind. The market is betting the order surge will translate to revenue soon, and the upcoming earnings report is the catalyst to prove it. The technical breakout at $8.7795 is now the price level where that bet gets tested. A beat on the top line would confirm the order strength is real and resolve the headwind. A miss could quickly reverse the momentum. The volume spike shows the market is already positioned for a positive catalyst. Now it's waiting for the numbers.

The Strategy: VISION 2030 and Execution Risk

The rally is built on a bullish long-term story. The company's new VISION 2030 plan is a five-year roadmap for profitable growth, unveiled after executing a 5-Point Strategy since 2021. The goal is ambitious: revenue of $235 million to $285 million by 2030, with division operating margins of 20% and net income margins of 10% at the midpoint. This is the kind of strategic clarity that can support a sustained rally. The market is betting the company has the team and the process to get there.

But the near-term execution risk is clear. Despite the strong order surge, the company posted a sequential decline in both revenue and gross margin in the third quarter. Revenue fell to $26.2 million, a 13.3% drop year-over-year, while gross margin slipped to 41.9%. The reason? Late-quarter shipment delays from technical challenges with new systems. That's the operational hiccup that needs resolution. The backlog, which jumped to $49.3 million, is a positive signal, but it's also a liability if not converted into cash quickly.

The critical task for the next earnings report is straightforward: convert that $49.3 million backlog into revenue and manage costs to stabilize margins. The market has already priced in a massive earnings beat, but the technical breakout at $8.7795 is now the price level where that execution gets tested. A clean beat on the top line would confirm the order strength is real and resolve the headwind, likely fueling a move toward the $9.00 target. A miss, or continued margin pressure, could cap the rally and force a test of the $8.70 support.

The bottom line is a bullish plan with near-term execution risks. VISION 2030 sets a high bar, but the stock's move is a vote of confidence in the company's ability to hit it. The next few weeks will show if the operational hiccups are just a blip or a sign of deeper friction. For now, the trend is up, but the path to $9.00 depends entirely on the company's ability to deliver on its own strategy.

Catalysts and Watchpoints

The bullish breakout is now a live trade. The setup is clear, but the thesis hinges on two distinct tests: a fundamental catalyst and key technical levels. Traders need a checklist.

The primary catalyst is the upcoming Q3 2025 earnings report. The market has priced in a massive 75% year-over-year jump in EPS to $0.21 per share. That's the headline that justifies the current price action. A clean beat on both EPS and revenue would confirm the order surge is translating to cash flow, resolving the near-term execution headwind. A miss, or continued margin pressure, could quickly reverse the momentum. The recent downward revision in earnings estimates over the last month is a red flag; the company must deliver to silence doubters.

On the technical side, the path is defined by two critical levels. The immediate target is a breakout above the 50-day moving average, which sits around $9.00. A sustained move above that level would confirm the trend shift and open the path toward the next major hurdle: the 200-day moving average. The current price is testing the high of the breakout session at $8.7795, so a failure to hold that level would signal weak follow-through.

The critical support level is the low of the session at $8.09. A break below that price would invalidate the recent breakout and signal a return to the prior downtrend. That level is now the key to watch for bearish confirmation.

The bottom line is a binary setup. The earnings report is the fundamental test. The $9.00 and $8.09 levels are the technical thresholds. Hold above $8.09, deliver the beat, and the rally to $9.00 is on. Fail on either front, and the breakout is a fakeout.