It looks like the NASDAQ has regained its footing and bulls are in charge, for now at least. With the index on the rise, investors might be wise to look for tech stocks that have plenty of headroom with the potential upside breakouts. Just in case the markets swiftly reverse course, it’s equally important to have clearly defined downside.
Ciena Corporation (CIEN) fits all the above. The communications company provides network hardware, software, and services that support the transport, routing, switching, aggregation, service delivery, and management of video, data, and voice traffic on communications networks worldwide.
Like the NASDAQ, Ciena recently popped past a descending trendline that acted as a lid since May. Additionally, buyers pushed CIEN beyond its 50-day moving average for the first time since March. There could be plenty of upside left, with the 200-day average as the most prominent destination.
However, before CIEN can get to the 200-day number of $58.90, there are a couple of points of resistance along the way. Our first target is $52.50, but there isn’t a lot of technical debris there, so it should not take too hard of a push to find the next level up at $55. If/when CIEN gets north of $55, then the 200-day mark will likely act like a magnet and draw the stock price close.
On the downside, that’s simple, if CIEN falls and closes below the descending trendline it just vanquished, we’d cut losses with a close under $47.5 and below $45 if you prefer more wiggle room.
Day/swing trading is risky and only appropriate for the most aggressive investors who can afford to lose money in a short time period.