Sapient Corporation (NASDAQ: SAPE)

Sapient Corporation provides various services that enable clients to leverage marketing and technology to transform their businesses in the United States and internationally. It operates in three segments: SapientNitro, Sapient Global Markets, and Sapient Government Services. The SapientNitro segment offers Web and interactive development, traditional advertising, media planning and buying, strategic planning and marketing analytics, and multi-channel commerce strategy and solutions. The Sapient Global Markets segment offers services in the areas of buy-side investment process; commodities trading and risk management; derivatives platforms; clearing and collateral; data management; Java and operations services to capital and commodity markets. The Sapient Government Services segment offers digital marketing strategy and execution, program management, solution delivery, strategy, and communications and outreach services, as well as provides consulting, technology, and marketing services.

To review Sapient’s stock, please take a look at the 1-year chart of SAPE (Sapient Corporation) below with my added notations:

1-year chart of SAPE (Sapient Corporation)

Sapient’s stock has been trading sideways for the last 4 months. Over that period of time, SAPE has formed a clear resistance level at $16 (red). In addition, the stock has also created a strong level of support at $15 (blue) that has actually held since mid-August. This rectangle formation on SAPE is very helpful in trading it because at some point the stock will have to break one of the two levels the pattern has created. Although the stock isn’t a huge ‘mover’, a break out of the rectangle should send the stock on a more significant run.

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The Tale of the Tape: SAPE has clear levels of support at $15 and resistance at $16. The possible long positions on the stock would be either on a pullback to $15, or on a breakout above $16. The ideal short opportunity would be on a break below $15.

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

Follow me on Twitter: @cmtstockcoach