Ixia (NASDAQ: XXIA)

Ixia provides converged Internet protocol (IP) network validation and network visibility solutions in the United States and internationally. The company’s solutions are used to design, verify, and monitor a range of Ethernet, Wi-Fi, and 3G/long-term evolution equipment and networks. It offers hardware platforms, such as chassis; interface cards, which generate, receive, and analyze various traffic types at multiple network layers; and Net Tool Optimizer, a hardware appliance that provides network visibility into physical and virtual networks, and optimizes monitoring tool performance. The company also provides a suite of software applications tools for video testing, voice testing, intelligent network testing, conformance testing, security testing, application testing, router testing, switch testing, wireless testing, Wi-Fi testing, broadband testing, and automated testing requirements.

Please take a look at the 1-year chart of XXIA (Ixia) below with my added notations:

1-year chart of XXIA (Ixia)

XXIA obviously hasn’t done well this year. The stock has fallen from a peak of $22 in March down to a low of $12 in December. The two most common price levels on this stock along the way have been $16 (blue) and $14 (red). Each of those prices has been both support and resistances multiple times. Now, the stock has found its most recent low at $12 (green). So, the stock commonly finds the increments of $2 important.

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The Tale of the Tape: XXIA is currently trading between $12 and $14. A long trade could be made on a pullback to $12 or on a break back above $14. Short trades look better on this stock at this point though, so a short trade on a rally to $14 or on a break below $12 would make good sense too.

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