Monday, July 12, 2010

Stock to Watch: Tibco Software

The prognosis for stocks today is not good so its likely we will see better - low risk - buying opportunities over the coming days. The past couple of weeks have not been kind to momentum driven stocks and I have to go back to Friday, June 25th to find the last time my breakout scan produced potential candidates in numbers.

June 25th was an odd day for markets as indices traded with indecision for the most part. Only the Russell 2000 was able to mount a defense of its 200-day MA while other indices were still coming to terms with breaks in theirs. So for the scan to turn up 31 candidates back then was a bit of a shock.

Unfortunately, the vast majority of these breakout stocks suffered as traders sold into strength as markets continued their downward descent. But one, Tibco Software (TIBX), has managed to go one better by posting a higher close Friday (and a price higher than the one which qualified it as a breakout in the first place).

Zignals Chart Image

The stock emerged last week from a trading range bound between $10.75 ($10.85?) and $12.50. This trading range sits in the upper range of a broad rising channel built off the November 2008 low, so a chance to shift gears higher is a possibility.

When the stock featured on June 26th it was accompanied by a gap. This gap was tested intraday on July 1st but it wasn't closed - (so far) confirming it as a true breakout gap. The gap is an ideal stop placement, a close below $11.25 will end the breakout in its current form and drop prices back into its prior trading range. You can set an SMS/Email alert on Zignals for a price cross below $11.25.

As for upside; a measured move from the trading range gives a target of $14.15. Analyst's have a 1-year price estimate of $12.83 which is pretty much close to par value at the moment. Altogether there are two 'buy', three 'outperform', five 'hold' and one 'underperform' ratings on the stock.

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Dr. Declan Fallon, Senior Market Technician for Zignals.com, offers a range of stock trading strategies for global markets, also available through the latest rich internet application for finance, the Zignals MarketPortal or the Zignals Trading Strategy MarketPlace.

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