JNPR Stock: Picture Perfect
Today is a special day, and aside from the Nasdaq index venturing on to uncharted grounds as it creates new all-time highs, I have stumbled upon a number of very interesting price charts. One stands out in particular because it is a flash from my past. Juniper Networks, Inc. (NYSE:JNPR) stock was a high-flying investment during the tech bubble boom, and it was quite a spectacle to watch. The aftermath of the boom, unfortunately, left many cringing at the magnitude of the losses incurred. Putting nostalgia aside, I am focusing on Juniper stock because there are a number of developments on the JNPR stock chart that are supporting the view that higher stock prices are now in development.
My bullish view on Juniper Networks stock has been generated using technical analysis. This method of investment analysis is based on the notion that historical price and volume data can be used to decipher the predominant trend and forecast future prices. So as a result, I take my cues on an investment from the indicators and price patterns that are generated on a company’s price chart. For many, this notion may sound like nonsense, but I have spent the better part of two decades focusing on this method of analysis for the simple reason that it works. I am sure that my followers can also attest to the value this method of analysis can provide.
The following price chart illustrates the completed technical pattern that is suggesting that higher Juniper stock prices are now in development.
The completed technical price pattern that is illustrated on the price chart above is known as a “cup & handle” pattern. This pattern is created as the share price is contained below a level of price resistance that causes sell-offs to ensue after it is tested. The first time this level of resistance is met, it causes a large reaction to ensue, while the second test of this level causes a smaller reaction to occur. These reactions to resistance form the cup and handle, respectively. This technical price pattern is finally completed when the stock breaks above the level of resistance that had contained it on the previous two attempts.
Chart courtesy of StockCharts.com
The cup & handle pattern is a continuation pattern, and the completion of this pattern last week, via a breakout, serves to suggest that higher prices are now on the horizon. Not only does this pattern suggest the direction price is heading in, but it is also instrumental in generating a potential price objective. This price objective is obtained by taking the depth of the cup and extrapolating that value above the level of resistance that served to contain the stock price. Applying this method to the price pattern above produces a potential price objective of $38.00.
I believe this potential price objective is just the first stop en route to much higher prices. This bullish view is based on the longer-term Juniper stock chart, which is presented below.
Chart courtesy of StockCharts.com
The price action on the long-term chart is quite compelling, and it is the basis of my bullish view that a significant run has just commenced. An ascending channel has slowly shown its face, and this pattern contains two parallel upward-sloping trend lines that represent support and resistance. In essence, JNPR stock will oscillate between these levels of support and resistance as this bullish trend continues to play out.
This ascending channel pattern has been in development since 2001 and is very large, to say the least. So as a result, to reach a level of support or resistance takes years at a time. Over the last five years. Juniper Networks has been trading along support outlined by this channel, and it now seems ready to head higher and test resistance once again. The short-term JNPR stock chart supports the view of higher prices, and the bullish backdrop of the tech-heavy Nasdaq index reinforces this notion. Together, these factors serve to increase the odds that resistance could once again be tested.
It has been over six years since this trend line was tested, so I can easily say it’s long overdue. The trend line currently sits near $55.00, and represents an impressive 66% return from current prices. The price objective suggested by the cup and handle pattern would put JNPR stock right in the middle of this channel. I believe that achieving this target would only be the preliminary price objective before another run develops that takes Juniper stock to test its ultimate objective, which is resistance outlined by the ascending channel.
Bottom Line on Juniper Stock
I am bullish on Juniper stock because a particular technical price pattern is suggesting that higher prices are now in development. My bullish view is contingent on the indications that are generated on the JNPR stock, and as long as they are in bullish alignment, I will continue to carry a bullish view on this investment.