FireEye Inc (NASDAQ:FEYE) stock has coiled up of late, and shares of the internet security company look ready to make a technical break higher. FEYE stock just needs a catalyst.
What was once a nearly $100 stock in 2014 by February of this year slipped out of the teens at one point. The stock has rebounded a few dollars from that point, and while FEYE stock has been struggling to gain any new upside momentum, signs increasingly point to a potential breakout in FireEye sooner than later.
Internet security is a hot topic and likely will only become more important for the foreseeable future. From that perspective, I hear plenty of “fundamental analysts” spewing positive noes with a tone of belief that FireEye stock isn’t trading significantly higher. To them, I say: It is what it is. Active investors need to play the market they have, not the one they wish they had.
Last week, Bloomberg broke news that FireEye had rebuffed multiple takeover offers, including one from internet security company Symantec Corporation (NASDAQ:SYMC). FEYE stock jumped as a result, but it still remains with a tight technical pattern that it’s just itching to break out of.
Let’s take a look at the visuals:
FEYE Stock Charts
On the multiyear weekly chart, we see a familiar post-initial public offering chart. When FireEye became a publicly traded company in 2013, shares first shuffled sideways for a few months before a big rally in March 2014. But the vertical leap quickly deflated, and about two months later, FEYE stock had plunged below its IPO price.
Another rally attempt in 2015 only pushed FEYE to a significantly lower high versus the 2014 highs, and by late 2015, the stock took out its 2014 lows.
But after many months of treading water through this lens, FireEye shares finally look closer to staging a more serious rally attempt that could bring it back to the black horizontal line (i.e., former support around the $25 mark).
On the daily chart, we see that we can draw a well-defined line of diagonal resistance from late 2015, connecting the lower highs along the way. The blue 100-day simple moving average has also continued to offer resistance, and the longer FEYE stock can stay above there, now the better the odds of a more sustainable breakout also past diagonal resistance.
In terms of a catalyst for a possible breakout, perhaps further M&A rumors or simply a push higher from the broader stock market could give FireEye the energy it needs.
A first upside target for FEYE stock would be the $20 area, which also coincides with the red 200 day simple moving average.
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