NTAP Stock: Launch Sequence Initiated
NetApp Inc. (NASDAQ:NTAP) reported earnings after the close, and it beat on the bottom line by $0.06 and guided third-quarter earnings on the high end of consensus expectations.
Investors applauded these numbers, as NTAP stock was moving higher by 10.38% in after-hours trading.
The implication of this price move is becoming increasingly difficult to describe; perhaps my excitement has me at a loss for words. If NTAP stock can sustain these price gains, a monster-sized technical pattern is set to execute, and the upside is enormous.
I am referring to this pattern as monster-sized because there are numerous bullish patterns embedded within one another, and the largest one took 16 years to develop. I have stated previously in my other reports that large patterns that develop over a long duration are the best performing and have the highest levels of success.
The following NTAP stock chart illustrates the monster-sized pattern I am referring to.
Chart courtesy of StockCharts.com
The NTAP stock chart above illustrates a symmetrical triangle. A symmetrical triangle is a consolidation pattern that contains two converging trend lines. One line represents resistance, and the other represents support. The pattern develops as each subsequent rally ends at a lower high because sellers are more willing to exit positions at a lower price and, for each subsequent sell-off, buyers are more willing to step in and buy at higher prices.
This price action results in momentum being built and stored each time the price is rejected by the trend line. Each camp is respectively building a position, and a battle between bulls and bears ensues. Longer and larger patterns will translate into equally large and lengthy reactions.
A breakout would cause one camp to cover, or exit their respective positions, and a substantive run in the share price would follow. NTAP stock is set to break out, and the implications are mind-boggling. The initial target on a triangle is the highest point from which it began. Under this premise, the projected price objective of NetApp stock is $142.72.
The following NetApp stock chart illustrates the pattern that is embedded with the triangle and reaffirms the bullish outlook.
Chart courtesy of StockCharts.com
The NTAP stock chart above illustrates that within the symmetrical triangle, another pattern exists. The pattern is an ascending channel, and this pattern is equally impressive in size, as it took 15 years to develop. There are two parallel lines that define this trend. One represents resistance, and the other represents support. The price will oscillate between these two trend lines for as long as time and price permits.
Each and every time NetApp stock tested support, the price was quickly turned away and a new bullish trend developed that pushed NTAP stock higher until resistance was met.
There is a consolidation wave that is embedded within the ascending channel and it is highlighted in black in the chart above. This wave is set to complete when the price crosses above it. This would set in motion an impulse wave that would take the price to test the resistance level set by the ascending channel. This level currently sits around $90.00, and it is rising with time as the pattern progresses.
The patterns highlighted above provide myself the requirements to set up a systematic trading strategy. The patterns have provided the required price objectives and my risk can be defined by using the trend lines. The best part? NetApp stock also pays a two-percent dividend.
Bottom Line on NTAP Stock
I am extremely bullish on NetApp stock. The size of the technical patterns that are set to execute have projected price objectives that present an enormous amount of upside. As long as NTAP stock closes the week above $36.00, my bullish view will remain intact.