On the other hand, maybe I was right, the market has started a rally. Wednesday brought a little doubt to my mind, but yesterday seems to have confirmed my belief that a rally of some extent had started on Tuesday. Thanks to Tuesday and Thursday’s moves, a lot of stocks that I am watching have broken back above key areas of resistance. This should be a sign of higher prices for those stocks, even if those moves are only temporary. One stock of many that I am watching would be BSFT (Broadsoft, Inc).
BroadSoft, Inc. is global provider of software that enables fixed-line, mobile and cable service providers to deliver voice and multimedia services over their Internet protocol-based (IP-based), networks. The company’s software, BroadWorks, enables its service provider customers to provide enterprises and consumers with a range of cloud-based, or hosted, IP multimedia communications, such as hosted IP private branch exchanges (PBXs), video calling, unified communications (UC), collaboration, and converged mobile and fixed-line services.
Please take a look at the 1-year chart of BSFT (Broadsoft, Inc) below with my added notations:
BSFT has what I believe is a key level at $30 (blue). You can see the $30 mark as resistance back in January, support in June, and then back to resistance again over the last couple of weeks. Yesterday BSFT broke back above the $30 level. If the market rally cooperates, BSFT could make its way back up to the $35 area. However, if BSFT cannot hold $30, the stock will probably test new lows for the year.
The Tale of the Tape: After creating an important level at $30, BSFT has broken back above that resistance this week. BSFT should be moving higher from here, even if only for a while. A long position could be entered at or near $30 with a stop below $30. A break back below $30 would negate the forecast for a move higher and a short position would be advised instead.
Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.
No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!
Christian Tharp, CMT