Hey, Everyone! Hope you had a great Mother’s Day weekend! It’s always a big time of year for me. My birthday is in the beginning of May and my mom’s and sister’s birthdays both fall on May 15th, which is close to Mother’s Day. I ordered some gifts online and it got me thinking about online security.
FireEye Inc. (FEYE) is a leader in stopping the new generation of cyber attacks. I don’t know if their inability to stop the HeartBleed virus a few weeks back had any effect on the stock price and truthfully, I have no clue if FEYE had any involvement at all. This is one of those tech companies that I personally feel will make some lower lows in the next few weeks to months, along with TWTR, ZNGA, and GRPN. FEYE (like TWTR) broke a very strong support recently with a gap. 31.38 is now a very strong resistance. Granted, FEYE has had a large bearish move the last few weeks to months. Therefore, the trend is most certainly bearish. I won’t try to pick the bottom on this stock, but instead will continue following the trend at hand.
After all, the trend is your friend!
Since the trend has moved so strongly bearish, I feel a small accumulation phase here would be really important. The bearish trigger is a great one, at 25.21, but it might be best maybe one or two weeks from now. If you’re familiar with Bollinger Bands®, the bottom band is still screaming down and the relative strength index (RSI indicator) is really low on FEYE. That means that the selling is likely going to slow down for a bit and rest.
To learn more about chart patterns and reversal patterns, look at the blue arrow on FEYE. This is a pattern known as an island reversal. This is when you get two gaps (an exhaustion gap and a breakaway gap) at approximately the same price levels after an extreme trend (either bullish or bearish).
FOR YOUR WATCH LIST
Obviously FEYE had been in an extreme trend, doubling in less than two months. Put this stock on your watch list for a few weeks to a month or two down the road. Keep a bearish outlook on it and wait for the best shorting opportunity. In regards to the above mentioned GRPN, here’s an elusive and rare double trade set up: Bearish at 6.04, stop at 6.49, target 1 at 5.30, target 2 at around 4.65. Feel free to check out my recent TWTR article, too. That one looks lovely!
Have a great rest of your week, folks!
