OSI Systems (OSIS) Jumps 21 Percent

Shares of OSI Systems Inc (OSIS) shot up 21 percent on Friday to their highest level since May 17, after the company said it reached a settlement with the Department of Homeland Security over issues with its Rapiscan passenger scanning product and its software. The deal will allow the Hawthorne, California – based firm to continue its current and future business with U.S. federal government agencies.

OSI Systems’ stock got an immediate boost on the news, spiking to $64 and trading as high as $67.50. The ticker came off of its intraday high to close at $63.50, up $7.65, or 13.69%, on strong volume (nearly 1.5 million shares).

Looking at OSIS 1-year chart price-pattern, it can be said the ticker has been facing volatility and technical weakness for quite some time now. The stock of the electronic systems designer that recently broke through a new 52-week low, is up only 3.45% year-to-date, trailing the broader S&P 500 Index (SPX) by roughly 18 percentage points. But while this activity could be indicative of the name struggling technically — shares have changed hands between $48.10/Apr 24, 2013, and $81.23/Oct 26, 2012 in the past 52-weeks — it’s also true the security has been exhibiting some rangebound tendencies. Since late April, OSIS has not fallen below its previous low. In fact, it has been making higher-lows, which is suggestive of the stock trying to consolidate at current levels, as well as a confirmation that with the stock breaking out to a 1-month high, the trend has changed.

If this upper range continues to be in play, momentum traders could take the name to re-test or possibly take out its next major overhead resistance located at the $66.34 and $71.36 levels, respectively. Having said this, it is prudent to note that after the recent spike, the ticker has entered into the overbought territory. The RSI with a reading value of over 63 signifies that overbought position.

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