Rackspace Hosting, Inc (NYSE: RAX)

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Rackspace Hosting, Inc. provides cloud computing services, managing Web-based IT systems for small and medium-sized businesses, and large enterprises worldwide. Its service offering combines hosting on dedicated hardware and on multi-tenant pools of virtualized hardware in a way that suits each customer’s requirements. The company offers dedicated cloud services comprising customer management portal and other management tools for managing the data center, network, hardware devices, and operating system software; and public cloud that provides pooled computing resources delivered on-demand over the Internet to manage a pool of computing resources across a larger base of customers and deliver computing resources to businesses when they need them. It offers cloud servers for computing, and cloud files for storage, as well as cloud applications, such as email, collaboration, and file back-ups; and hybrid hosting that provides hosted computing on dedicated hardware and on pools of shared resources.

To review Rackspace’s stock, please take a look at the 1-year chart of RAX (Rackspace Hosting, Inc.) below with my added notations:

RAX

RAX has recovered nicely from its June-July bottom. However, over the last (3) months the stock has been stalling at a clear $70 resistance level (navy). A break though this level would be a 52-week high and should mean higher prices overall for the stock. Another failed attempt to break through the $70 level could mean a fall back down to the common level of $60 (blue).

The Tale of the Tape: RAX is testing its $70 resistance level. A long trade could be made on a breakout though this level. A sell-off back down to $60 would provide an opportunity for a long trade as well.

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!

Good luck!

Christian Tharp, CMT