As September wears on, the market seems to be down but not out — stocks are well off their August panic lows, but haven’t yet completed a rebound.
So, the question becomes: Should investors come out of their defensive crouch and “buy the dip”? The answer is yes, but investors need to be careful — especially in such a volatile market.
It might seem like a scary task, but don’t worry.
When looking for bargains, technical analysis is your friend. In the technology space, the Profit Scanner powered by Recognia has identified three tech stocks to play a positive reversal. Read on for details.
Tech Stock Charts: Yahoo (YHOO)
Yahoo (YHOO) is looking like a great play for tech bulls. On Tuesday, YHOO completed a bullish engulfing line — which suggests that the stock’s troubles may soon be over.
The engulfing line comes after a clear downtrend, and takes the form of two candlesticks. In this pattern, the first, black candlestick is completely enveloped by the white real body of the second candlestick. Our takeaway, then, is that buyers are overwhelming sellers, paving the way for a reversal higher.
Also on Tuesday, Yahoo’s chart showed a bullish outside bar. Since the trading range completely overtook that of the prior bar, it’s essentially further confirmation that the downtrend is looking exhausted.
Tech Stock Charts: Marketo (MKTO)
Marketo Inc (MKTO) also seems to be giving bulls the green light. MKTO, which provides business-to-business cloud-based marketing solutions, completed a bottom triangle on Wednesday. As the name suggests, it’s a signal that the stock has bottomed and has room to run higher from here.
The bottom triangle starts off as two converging trendlines, with the stock making lower highs and higher lows. When it breaks above the upper trendline, that’s a sign of reversal out of the prior downtrend. Specifically, the Profit Scanner sees further upside to somewhere between $37.25 and $39 in the intermediate term.
Tech Stock Charts: AVG Technologies (AVG)
Cybersecurity stock AVG Technologies NV (AVG) has given some encouraging signs as well. The shares are up 7% from the Aug. 24 low, and on Monday came confirmation of a bullish Pennant.
This pattern emerges during a dynamic rally, when the stock has a brief moment of hesitation before running higher again. The Pennant has two converging trendlines, similar to the Bottom Triangle, and the bullish signal comes when the stock breaks above the upper boundary. The Profit Scanner’s target for AVG is $27.40 to $28.20 in the short term.
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.
