CommVault Systems, Inc (NASDAQ: CVLT)

CommVault Systems, Inc., together with its subsidiaries, provides data and information management software applications and related services primarily in North America, Europe, Australia, and Asia. The company develops, markets, and sells a suite of software applications and services under the Simpana brand. Its Simpana software suite includes solution for the backup and restoration of enterprise data for file systems, applications, databases, and virtual machine systems; integrated data archiving solution that optimizes data tiering and improves information governance. The company also provides solutions for protection of critical applications and data with snapshots and real-time replication; solutions to analyze, discover, track, trend, and report on physical and virtual storage usage. The company markets and sells its software applications and related services directly to large enterprises, small and medium sized businesses, and government agencies, as well as indirectly through a network of value-added reseller partners, systems integrators, corporate resellers, and original equipment manufacturers. It licenses its software applications to customers in various industries, including banking, insurance and financial services, government, healthcare, pharmaceuticals and medical services, technology, legal, manufacturing, utilities, and energy.

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

CVLT

Notice the rising wedge I have outlined on the chart of CVLT. A rising wedge price pattern is essentially a type of triangle formation in which the stock (CVLT) has formed an up trending resistance line (red) and an up-trending support level (blue). These two trend lines converging on one another combine to form a rising wedge, which is a terminal pattern. A break out of the bottom of this wedge should also coincide with a break of the $70 level (purple).

The Tale of the Tape: CVLT has created a rising wedge pattern, which should lead to a break lower. A short trade could be entered on a break out of the bottom of the wedge, which should be on a move below the $70 level.

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