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Trade of the Day: Carbonite (CARB)

This $10 stock is moving ‘backup’


Are you part of the 40% of Americans who haven’t backed up the data stored on your laptop, tablet or mobile device? Today’s Trade of the Day pick, Carbonite (CARB), can help – and the stock may also get you a 50% return in the near term.

Carbonite is a Boston-based firm that provides cloud-based backup solutions to files of all kinds, including documents, photos, music and videos.  It’s a user-friendly platform that offers tiered service levels to suit the customer. And, what’s more, CARB’s chart is showing that the stock is ready to jump to the next level for traders.

At the April 30 close, a bullish Continuation Wedge pattern appeared on Carbonite’s chart. Profit Scanner powered by Recognia reports the event occurred on volume of more than 200,000 shares, which is about 20% higher than typical trading volume for the stock.

A bullish Continuation Wedge tells traders that after a temporary interruption – which Carbonite’s stock saw in April – the prior uptrend is on course to continue. As you can see in the chart below, a bullish Continuation Wedge takes the shape of two converging trendlines that are both slanted downward counter to the trend. During this time, bears are attempting to win out over the bulls, but at the end of the struggle, the bulls triumph as the stock breaks above the upper trendline, which signals that the prior uptrend should continue.

Chart courtesy of Recognia

Chart courtesy of Recognia

Carbonite’s Target

The pattern’s duration suggests that traders won’t have to wait long for Carbonite to move up to its target. The bullish Continuation Wedge is expected to resolve in just 20 trading days to the $14.75 to $15.75 levels.

If CARB hits the most conservative target, it would represent a 49% jump from Thursday’s opening price of $9.86. A return to north of $15 would put CARB back at all-time highs, so be mindful that there’s near-term resistance at the $10.68 level, but if the stock can push through, it will encounter more resistance near the $15 mark.

Profit Scanner puts a tight stop-loss level at a close below $8.83.

While Profit Scanner does not make active recommendations for options trades, a look at CARB’s option chain shows thin volume and wide price spreads. The more fertile ground for traders appears to be trading the stock directly.

In addition to the target from the bullish Continuation Wedge, several other short-term bullish signals have appeared on Carbonite’s chart in recent days:

  • April 30:  short-term bullish Commodity Channel Index
  • April 29: short-term bullish MACD
  • April 29: CARB’s price crossed the 21-day Moving Average
  • April 29: bullish Gap Up
  • April 29: short-term Momentum
  • April 29: short-term bullish Williams Percent Return

While the short-term (two to six weeks) looks positive for Carbonite, a word of caution for longer-term traders: No bullish signals have appeared on CARB’s chart, so be quick to take any profits that emerge in this cloud player.

Profit Scanner powered by Recognia can help traders of all levels find new trading customized trading opportunities for finding the best stocks to buy or short in specific sectors, price points, timeframes and so much more. Or use Profit Scanner’s technical insight to validate your own trading ideas. See how easy this powerful tool is to help you uncover hidden opportunities in the market.

Article printed from InvestorPlace Media,

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