AKAM Is an Investor’s Nightmare

by Sam Collins | July 11, 2012 1:56 am

Akamai Technologies (NASDAQ:AKAM[1]) – This has been a favorite of the Trade of the Day since Oct. 31, 2011, when I recommended the stock[2] at $27 and it then ran to almost $40. But when the company missed its Q1 earnings estimates and announced the retirement of its CEO, I recommended selling it on April 26[3] at the market (around $33).

At that time, I also said, “As you can see from last night’s trading [AKAM had closed at $39.76 the day before], this is a very volatile technology stock, so a pullback to the low $30s might be a place to reinstate new positions.”

But despite positive reports from several research analysts, the stock fell below $26 and failed to hold above its 200-day moving average on a bounce. This failure confirmed that a huge-double top, which is a variation of a head-and-shoulders top, is in place.

And there are more technical negatives. Last week, the 50-day moving average crossed down through the 200-day moving average (death cross). And recent Nasdaq reports show that insiders have been sellers by a ratio of 3-to-1 during the past three months.

Investors should sell AKAM if they own it. Traders should short it at $30 with a target of $20, although it could get some support at $26. A stop-loss should be placed at $32 to protect against a reversal. Check with your broker for any special short-sale restrictions.

Trade of the Day – Akamai Technologies (NASDAQ:AKAM)[4]

Trade of the Day Chart Key

  1. AKAM: http://studio-5.financialcontent.com/investplace/quote?Symbol=AKAM
  2. I recommended the stock: https://investorplace.com/2011/10/akamai-has-cooled-but-is-heating-up-once-more/
  3. I recommended selling it on April 26: https://investorplace.com/2012/04/trade-of-the-day-akamai-technologies-nasdaq-akam-2/
  4. [Image]: https://investorplace.com/wp-content/uploads/2012/07/07-11-12-akam.jpg

Source URL: https://investorplace.com/2012/07/trade-of-the-day-akamai-technologies-nasdaq-akam-4/
Short URL: http://invstplc.com/1nxs89B