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Shares of Western Digital have been locked in a sideways pattern since an ugly post earnings(https://www.marketwatch.com/story/western-digital-stock-plunges-12-after-weak-earnings-outlook-2020-08-05?mod=mw_quote_news) flush back on August 6th.  The stock has been trading inside the September range throughout all of this month.  As a new week begins WDC is bumping up against a key overhead trendline(links July/Sept highs).  We believe the odds of an upside breakout are very high.  A close above $40.00(Oct. high) could spark quite a run. 

We consider WDC a fairly low risk buy at current levels.  On the downside a close back below $36.00 would violate last week’s low, as well as a scooping 50D MAV, sending a clear sign of more sideways trade to come.  Considering the heavy damage WDC sustained following the last two earnings reports(-12%/-16%) expectations for an upside surprise are quite low.  We view this as a positive. 

Earnings are due Oct. 28 after the bell.

We are long WDC in some managed accounts.