FireEye, Inc. provides products and services for detecting, preventing, and resolving advanced cybersecurity threats. Its products comprise threat prevention system that provides threat protection from network to endpoint for inbound and outbound network traffic, such as Web threat prevention appliances to analyze all Web traffic; email threat prevention appliances that detect and stop advanced attacks; and file threat prevention appliances, which analyze network file servers to detect and quarantine malicious software.
Take a look at the 1-year chart of FireEye (Nasdaq: FEYE) below with the added notations:
FEYE fell off a cliff after its March peak. However, since bottoming near $25 last May the stock stabilized and has been trading mostly sideways since. The more important thing to note is that FEYE has a key level at $45 (blue) that it has recently broke back above. This should lead to another leg up for the stock.
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The Tale of the Tape: FEYE has a key level at $45. A trader could enter a long position on a pullback down to $45 with a stop placed under the level. However, a short trade could be made instead if the stock fails to hold $45.
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!
Christian Tharp, CMT
Follow me on Twitter: @cmtstockcoach