INAP Stock: Constructive Price Action
I was doing my daily scan of investments, which involves looking for compelling investments with constructive stock charts, and I was led straight to Internap Corp (NASDAQ:INAP) stock, and I am quite compelled to say the least.
This small-cap company sports a $327.0-million market cap and operates as a high performance internet infrastructure provider. It has a footprint in the growing cloud computing space, and it offers a number of optimization solutions. The company is trading at 1x sales, which is very attractive, but it is the company’s stock chart that has really piqued my interest. The price action on the Internap stock chart is simple, easy to discern, and is suggesting that INAP stock is now staging an advance, so higher stock prices can now be expected.
If you have stumbled upon my publication for the first time, it is worth noting that my views on a potential investment are created using technical analysis. This method of investment analysis is predicated on my abilities to analyze a company’s stock chart in order to create a bullish or bearish bias. For nearly two decades, I have been studying and applying this style of investment analysis to my trading strategies and the results have been quite outstanding.
The following Internap stock chart illustrates the constructive price action that has piqued my interest in INAP stock.
Chart courtesy of StockCharts.com
This INAP stock chart has been modified in order to highlight the constructive price action.
Constructive price action consists of an alternating two-wave structure. This two-wave structure contains impulse waves, which are highlighted in green on the stock chart above, and consolidation waves, which are highlighted in purple on the stock chart above.
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An impulse wave defines the stage in a bull market where the share price stages an advance that is characterized by a swift and linear appreciation in price. This waves only lasts a short duration, but all of the gains are made during this wave. So, as a result, this wave is appropriately labelled an impulse wave due to its impulsive nature.
A consolidation wave defines the stage in a bull market where the share price moves in a counter-trend trading range. The defining characteristic of this wave is that the stock price fails to stage an advance. The function of this wave is to alleviate any of the overbought conditions that were created during the previous impulsive advance. Alleviating an overbought condition creates the necessary environment for a new impulse wave to develop.
These distinct waves feed off each other, and therefore, in an alternating wave structure, a sustainable advance can easily develop. The best performing investments are littered with such price action.
In late June, INAP stock exited the consolidation wave in an upward direction, suggesting that an impulse wave was in development. The Internap stock price proceeded to forge a new 52-week high, which reinforced the notion that an impulsive advance was in development.
Aside from suggesting that the investment is in a bullish advance, this wave structure can be used to project a potential price objective for the current impulse wave that is in development. A potential price objective can be created based on the assumption that impulse waves that are separated by a consolidation wave have an above-average tendency to mirror each other in terms of their length. In this case, the preceding impulse wave was $2.35 in length, and if I apply the metric to the current impulse wave that is in development, it creates a potential price objective of $5.35.
This objective doesn’t mean that the investment is set to top at this level, it only suggests that the impulse wave that is currently in development is projected to hit that level before another consolidation wave is expected to develop. A consolidation wave is needed to alleviate any overbought conditions, sustaining the bullish trend that began in December 2016.
As long as Internap stock continues to construct theses waves in this alternating sequence, I can only assume that the bullish trend towards higher prices is set to persist.
Bottom Line on Internap Stock
I am quite excited that I stumbled upon Internap stock because the price action is quite compelling, suggesting that this investment is set to appreciate. So, as a result, I will continue to hold a bullish view on INAP stock until there are indications on the company’s stock chart that suggest another view is warranted.