NetGear, Inc. (NASDAQ: NTGR)

NETGEAR, Inc. engages in the design, development, marketing, and sale of networking products. The company offers home networking, storage, and digital media products to connect users with the Internet and their content and devices; networking, storage, and security solutions to commercial businesses; and whole home networking solutions to service providers for sale to their customers. Its products include commercial business networking products consisting of Ethernet switches, wireless controllers, Internet security appliances, and network attached storage devices; broadband access products, such as routers, gateways, IP telephony products, and media servers; and network connectivity products comprising wireless access points, wireless network interface cards and adapters, Ethernet network interface cards and adapters, media adapters, powerline adapters and bridges, and multimedia over coax alliance standard adapters and bridges. The company produces its products through third-party manufacturers.

Please take a look at the 1-year chart of NTGR (NETGEAR, Inc.) below with my added notations:

1-year chart of NTGR (NETGEAR, Inc.)

The trade to watch for on NTGR is relatively straightforward. The stock has been hitting a very important level of resistance at $40 (navy) for the entire year. No matter what the market has or has not done over that period of time, NTGR has not been able to break through that area of resistance. If the market rallies much higher NTGR would probably break above that resistance and move overall higher from there.

The Tale of the Tape: NTGR has a key level of resistance at $40. If the stock were to break through that resistance, a long position would be recommended with a stop loss placed below $40.

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