Juniper Networks designs, develops, and sells products and services that together provide its customers with network infrastructure that creates responsive and trusted environments for accelerating the deployment of services and applications over a single network. Juniper Networks serves the networking requirements of global service providers, enterprises, and public sector organizations that view the network as critical to their success. The company offers a product portfolio that spans routing, switching, security, application acceleration, and identity policy and control, which are designed by management to provide performance, choice and flexibility. Juniper Networks operations are organized into two segments: Infrastructure and Service Layer Technologies.
To review Juniper Networks’ stock, please take a look at the 1-year chart of JNPR (Juniper Networks, Inc.) below with my added notations:
After breaking drastically lower in July, JNPR fell into a sideways, consolidation pattern know as a Rectangle. This type of pattern forms when a stock gets stuck bouncing between a horizontal support and resistance. A minimum of (2) successful tests of the support and (2) successful tests of the resistance will give you the pattern. The nice thing about a Rectangle pattern is that it will provide you with clearly defined breakout and breakdown points. For JNPR, the Rectangle pattern formed a $22 resistance (red) and a $20 support (green). Now that JNPR has broken the $20 support, the stock should be moving lower overall.
Chart patterns can also provide price targets. Simply take the height of the overall pattern and add or subtract that amount to or from the breakout or breakdown point to get the minimum price objective. For example, since the Rectangle pattern for JNPR is $2 high ($22 – $20), JNPR should fall to a minimum of $18 ($20 – $2) now that the stock has broken below the $20 level. Chart pattern price targets are certainly not guarantees, but they are often fulfilled.
The Tale of the Tape: JNPR had formed a very common chart pattern know as a Rectangle. This pattern shows clear breakout and breakdown points for a potential long or short position. For JNPR, now that the stock has broken its support, a trader would want to enter a short position on any rally back up to $20. It is at that $20 level that a trader would expect the “old support to become new resistance”.
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