Trade of the Day: QLogic Corporation (NASDAQ:QLGC)

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The past couple of sessions have been good to Nasdaq stocks like QLogic Corporation (QLGC), and the Profit Scanner powered by Recognia has spotted a compelling bullish opportunity on QLGC’s chart.

QLogic has been providing data, server and storage networking infrastructure since the early ’90s; today it’s a key player in the shift toward cloud computing and the emphasis on Big Data.

The quarterly report on May 6 showed earnings per share of 26 cents, well above expectations, and a net revenue decline (year over year) to $119.4 million — but that, too, beat expectations, so Wall Street welcomed the release by taking the shares 15.5% higher on the day.

More recently, QLGC has been sending several bullish signals. On Friday, the shares crossed above their 21-day moving average. Then, on Tuesday, both the Momentum indicator and the Commodity Channel Index turned short-term bullish.

Looking a bit farther afield, QLogic is sending an intermediate-term bullish signal as well. On Monday, Profit Scanner confirmed a bullish Continuation Diamond pattern on QLGC’s chart — suggesting that, within roughly the next month and a half, the stock should see up to 19% further upside.

Trade of the Day: QLogic Corporation (NASDAQ:QLGC)

As you can see in the chart, QLGC had been consolidating for the last few weeks — then broke upward in Monday’s session to continue its prior uptrend. That move above the upper trendline of the “diamond” is what confirmed the pattern, and now Profit Scanner is looking for a further move to $15.60–$16.20.

Technical patterns like these are quite handy…but they’re not a crystal ball. So, you’ll want to look at a couple of key factors to help gauge if this particular pattern is reliable.

First, you want to make sure the inbound trend isn’t too shallow. (If it is, the consolidation is likely to drag on a bit longer.) Profit Scanner‘s rule of thumb is an inbound trend about twice as long as the pattern itself. In this case, QLGC’s inbound trend was 50 trading days, and the pattern duration was 37 days.

QLogic’s support and resistance levels also support the bullish Continuation Diamond. Support is at $13.11, right around the turning point of the lows, and resistance is at $13.63, near the top peak of the Diamond.

And finally, light volume would be a negative for the pattern. Luckily, trading volume has hung right around its average level (570,000 shares) throughout the pattern. So, all things being equal, QLGC is looking good for the further 14%–19% gain that Profit Scanner is predicting.

Profit Scanner powered by Recognia can help traders of all levels uncover these signals to determine the best timing to buy. 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, https://investorplace.com/2016/05/trade-day-qlogic-corporation-nasdaq-qlgc/.

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