Guidewire Software Inc (NYSE: GWRE)

Guidewire Software, Inc. provides system software to the property and casualty (P&C) insurance industry primarily in the United States, Canada, and Australia. It provides Internet-based software platforms for core insurance operations, including underwriting and policy administration, claim management, and billing. The company’s Guidewire InsuranceSuite includes PolicyCenter, an underwriting and policy administration application, which serves as a system-of-record that supports the entire policy lifecycle comprising product definition, underwriting, quoting, binding, issuances, endorsements, audits, cancellations and renewals; ClaimCenter, a claims management application for claim intake, assessment, settlement, and processing of claim-related financial transactions; and BillingCenter, a billing and receivables management application. It also offers add-on modules to its InsuranceSuite consisting of Rating Management, which enables P&C insurance carriers to manage the pricing of their insurance products; Reinsurance Management that allows P&C insurance carriers to execute their reinsurance strategy through their underwriting and claims processes. Its customers include insurance carriers for property and casualty, and workers compensation insurance.

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

1-year chart of GWRE (Guidewire Software, Inc.)

After trading mostly sideways during the fall of last year, GWRE finally broke into a trend higher in January. Since that break, the stock has shown a commonality in the prices it tends to “bounce” on as it moves higher. In February the stock found support at $30 (blue) and then in April the stock bounced on $35 (red). Finally, in May the stock found support at $40 (green). So, as GWRE moves higher it tends to pull back to the most recent increment of $5 and find support there.

The Tale of the Tape: GWRE tends to find support on the “5’s”. A trader could enter a long position at $40 with a stop placed under the level. If the stock were to break below that support the uptrend would most likely over and a short position would be recommended instead.

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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