NTAP Stock: Enormous Potential
The pattern that is painted on the NetApp Inc. (NASDAQ:NTAP) stock chart is quite compelling and remarkable. NTAP stock is on the verge of breaking out of one of the largest patterns I have ever come across, and the implications of a bullish breakout are enormous.
For those not familiar with my previous publications, I use technical analysis as the basis of my investment views and trading strategies. Technical analysis is based on the notion that historical price and volume data can be used to discern trends and forecast future prices.
NTAP stock creates price patterns at a turtle’s pace, and this is the best way I can describe how long it takes for Netapp stock to create a pattern. The price pattern that has drawn all my attention has been 16 years in the making, and still counting.
The following NTAP stock chart illustrates one of the largest patterns I have ever come across.
Chart courtesy of StockCharts.com
The NTAP stock chart above illustrates a symmetrical triangle that has been in development for 16 years. The reason why I am so ecstatic about this pattern is because both the duration and the shape of the pattern suggest an explosive outcome. It would be like pulling the pin on a
grenade nuclear bomb.
I have learned from my experiences that larger patterns that span long time frames produce better results. I would consider any pattern that took over a year to develop to be considered large and long. So when I come across a pattern that has been in development for 16 years, I cannot help but be in shock and awe.
This large pattern that has developed is a symmetrical triangle, a consolidation pattern that contains two converging trend lines. One line represents resistance and the other represents support. As the pattern progresses, these two converging trend lines minimize the amount of space that price can travel in. This confinement results in momentum being built and stored in anticipation of a resolution where all the momentum will be released. As a result, triangle patterns are particularly explosive.
The theory behind triangle patterns is that once price finally exits the pattern, the initial price objective is based on the highest or lowest price point that was used to create the triangle. A bullish breakout would produce an initial price objective of $142.72, and would represent windfall gains, given that NTAP stock currently resides at $36.37.
The following Netapp stock chart supports the notion that the triangle will be broken to the upside.
Chart courtesy of StockCharts.com
Even the price action is at a turtle’s pace. The NTAP stock chart above is what a healthy bullish price action would normally look like on a stock chart over a three- to six-month period. The price action above is eight years in the making.
Healthy bullish price action is characterized by impulse waves that advance price, and consolidation waves that unwind any overbought conditions and set up the next impulse wave.
The impulse wave took a little over two years to complete, and the trough-to-peak return was 487%. This stock spent the next six years within a consolidation wave, where any overbought conditions were being unwound and the setup for the next impulse wave was being created.
If Netapp stock can finally gather enough strength to break out of this consolidation pattern, it would create a scenario where two embedded patterns are breaking out at the same time. This would create such a powerful surge in price that it would ultimately obliterate any short sellers in such a way that some would be wondering if a nuclear bomb went off.
Bottom Line on NTAP Stock
I am waiting patiently for a turtle Netapp stock to complete a price pattern that has enormous upside potential. Until that defining moment in NTAP stock, I am sitting on the sidelines with a neutral bias.