Technology has been a welcome addition to the overall market and the strength has come from a diverse bunch of sectors. Semiconductors have done some of the heavy lifting, more recently it has been the biotech involvement. Below we look at one name in the software arena, whose group has been a bit bifurcated with recent disappointments from ELLI ADP FTNT MANH, but generally on the rise. There has been a lot of consolidation in the space witnessed this week by ORCL taking out N (this year we have had DWRE taken out by CRM, and MKTO and CVT taken out by private equity). Of course we never make investment decisions based on takeover speculation, but SPLK has a lot to like on technical analysis merits on its own. Below is how we looked at the name in our Thursday 7/14 Game Plan.
Stocks that can be bought as they take out bullish ascending triangle formations are SPLK. SPLK is a software play down 1% YTD and 19% over the last one year period. Earnings are on the rebound with back to back gains of 2.6 and 7.7% on 5/27 and 2/26 following 4 consecutive losses of 3.5, 2.3, 4.8 and 3.3% on 11/20, 8/28, 5/29/15 and 2/27/15. SPLK is higher 15 of the last 21 weeks since the week ending 2/19 (the prior week bounced off round 30 number) and during that run included a 3 week winning streak that rose 42% between weeks ending 2/19-3/4. The stock has had issues with the very round 60 number with precise reversals the weeks ending 6/10 and 6/24. That number is also the top line in a bullish ascending triangle pattern that began last September (two weekly CLOSES above 60 were weeks ending 11/6 and 11/20/15). Enter with a buy stop above 60.40 and add to above a double bottom trigger of 76.95. The pivot comes from the intraweek high the week ending 7/24/15.