Sandisk's 15.31% Surge Forms Bullish Shooting Star as Technical Indicators Signal Mixed Signals

Candlestick Theory

Sandisk’s (SNDK) recent 15.31% surge on 2025-11-07 forms a bullish "shooting star" pattern, with a high of 240 and a close near the high at 239.48, suggesting strong buying pressure. Key support levels emerge around 207.69 (prior close) and 194.57 (2025-11-04 low), while resistance aligns with the 240 high. A breakdown below 207.69 could trigger a retest of 194.57, while a sustained close above 240 may confirm a breakout. The prior week’s mixed candlestick patterns—such as the 2025-11-05 hammer (201.87–218.94) and the 2025-11-03 inverted hammer (189.1–213.4)—indicate potential short-term reversals, but the recent volatility suggests a continuation of bullish momentum.

Moving Average Theory

Short-term moving averages (50-day, 100-day) show a steep upward trajectory, with the 50-day line currently above the 100-day line, confirming a bullish trend. The 200-day moving average, however, lags significantly, indicating a long-term accumulation phase. The price (239.48) is well above the 200-day MA, suggesting a strong uptrend, but the gap between short-term and long-term MAs has widened, hinting at potential overextension. A pullback to the 50-day MA could act as a critical support zone, while a cross below the 100-day MA would signal weakening momentum.

MACD & KDJ Indicators

The MACD line has recently crossed above the signal line, forming a bullish "golden cross," but the histogram’s divergence from price action—a narrowing histogram during the 15.31% rally—suggests diminishing momentum. The KDJ stochastic oscillator shows overbought conditions (K=85, D=75), with a potential bearish crossover on the horizon. While these indicators historically align for short-term entries, the backtest strategy’s failure over the past 20 days underscores the risk of relying solely on these signals in a volatile market.

Bollinger Bands

Sandisk’s price has surged to the upper Bollinger Band (240), with a 2.5% volatility expansion compared to the prior week. The narrow band contraction on 2025-11-04–2025-11-05 preceded the breakout, a classic "calm before the storm" pattern. However, the price’s proximity to the upper band and overbought RSI (discussed below) suggest a high probability of a near-term pullback. A retest of the middle band (221.98) could confirm consolidation before resuming the uptrend.

Volume-Price Relationship

The recent 15.31% rally was accompanied by a massive 20.55 million share volume, a 130% increase from the prior day’s 10.4 million. This surge in volume validates the price strength, as buying pressure outpaces distribution. However, if volume tapers off in subsequent sessions while the price remains above 230, it may signal a lack of follow-through, increasing the risk of a reversal. Conversely, sustained high volume during consolidation would reinforce the bullish case.

Relative Strength Index (RSI)

RSI stands at 72, entering overbought territory, with a 7-day average gain of 12.5% and an average loss of 4.2%. While not extreme (below 75), this suggests a potential correction. A close below 60 would indicate weakening momentum, while a sustained move above 70 may prolong the overbought condition, particularly if volume remains robust. Divergence between RSI and price—such as a lower high in RSI despite a higher price—could foreshadow a breakdown.

Fibonacci Retracement

Key Fibonacci levels derived from the 2025-04-04 low (30.11) and 2025-09-29 high (113.5) include 61.8% at 88.4 and 50% at 71.8. However, the recent rally from 2025-11-04 (194.57) to 240 creates a new short-term Fibonacci sequence, with 38.2% at 216.8 and 61.8% at 228.1. A retest of 216.8 could act as a pivot point; a break below would target 194.57, while a close above 228.1 may extend the uptrend.

Backtest Hypothesis

The backtest strategy of buying Sandisk on MACD and KDJ golden crosses proved unprofitable over the past 20 days, resulting in a 15.7% loss. This highlights the limitations of relying solely on technical indicators in a market influenced by external factors such as macroeconomic shifts or sector-specific news. While the recent candlestick and moving average signals align for a bullish bias, the divergence in MACD and KDJ efficacy suggests caution. Integrating volume analysis and Fibonacci retracement levels could improve the strategy, but investors should remain wary of overbought conditions and potential mean reversion.