NetApp, Inc. is a provider of storage and data management solutions. The company has a portfolio of application, virtualization, cloud, and service provider solutions. NetApp’s products and services are designed to meet the requirements and service levels of enterprises and their business applications. NetApp offers storage solutions that incorporate its unified storage platform and the functionality of its data and storage resource management software. NetApp markets and sells its storage data management solutions directly through its worldwide sales force and indirectly through channel partners such as value-added resellers, systems integrators, distributors, original equipment manufacturers and strategic business partners.
For a potential trading opportunity, please take a look at the 1-year chart of NTAP (NetApp, Inc.) below with my added notations:
Since August, NTAP had been moving in a mostly large, sideways move. During that time, the stock seemed to create a resistance at $45 (navy), which was also support back in April of last year. Earlier this week the stock finally broke through that resistance level. In addition, the stock had a nice increase in volume (red) on the breakout. Volume usually adds validity to a breakout or breakdown. Barring any major market sell-off, NTAP should be moving higher from here.
The Tale of the Tape: Now that NTAP has broken above $45, the stock should be headed higher and that same $45 level should now act as support on any pullbacks. A long trade could be entered on a pullback to that $45 level with a stop placed below $45. If NTAP were to break back below $45, a short trade might be entered instead and the forecast for a move higher would be negated.
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