Akamai Technologies Hitting Upper Rail of Downward Sloped Channel Ahead of Earnings Next Month
Cloud-based application software firm Akamai Technologies (Nasdaq: AKAM) has been trending lower since June and a downward-sloped trend channel has formed as a result. The stock has cycled lower with highs from June, July, September, November, and December forming the upper rail. The stock hit the upper rail on Friday and then turned lower on Tuesday.
I didn’t mention the hit from January as there is still a chance that the stock could break out of the channel with another move higher. But at this point it looks like the stock is poised for its next downward move. The stock’s 50-day moving average is in the same proximity as the upper rail and that could be adding another layer of resistance.
The connected peaks in the stock have come when the stochastic readings were in overbought territory and the indicators are there again. The RSI was elevated, but not in overbought territory at the peak on Friday. That has been the case in most of the instances where the stock hit the upper rail—the 10-day RSI has been elevated but not in overbought territory.
Akamai is set to announce earnings on February 12 and that could serve as a catalyst for the stock to break out of the channel. The stock will have to stay up near the upper rail for the next few weeks for that to happen. The earnings report in November did cause the stock to jump sharply, but it only took it from the bottom part of the channel up to the upper rail.
The company has solid fundamental indicators right now with an ROE of 13.8% and a profit margin of 25%. Earnings and sales have grown at a slow pace in recent years, but the earnings grew by 47% in the last quarterly report and analysts expect earnings to grow by 37% for the year as a whole.
Momentum Indicator for AKAM turns negative, indicating new downward trend
AKAM saw its Momentum Indicator move below the 0 level on September 03, 2024. This is an indication that the stock could be shifting in to a new downward move. Traders may want to consider selling the stock or exploring put options. Tickeron's A.I.dvisor looked at 82 similar instances where the indicator turned negative. In of the 82 cases, the stock moved further down in the following days. The odds of a decline are at .
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a provider of cloud services for delivering, optimizing and securing online content and business applications
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