This Is Why NetApp Stock Is Geared for Higher Stock Prices

NTAP Stock
Credits:iStock.com/LaymanZoom

NTAP Stock: A Bull Market in Development

I am returning to focus on NetApp Inc. (NASDAQ:NTAP) stock because the price action since February of last year has been a beautiful spectacle to see, and it serves as perfect textbook example of what bullish price action should look like.

The price action and number of technical indicators on the NetApp stock chart are suggesting that the bullish move toward higher prices is set to continue and that, therefore, the only view that is warranted on NTAP stock is a bullish one.

Before I move forward and outline these developments, it is worth noting that my views on NetApp stock have 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 speculate on which direction the stock price is heading in next. I have been applying this method of analysis to my investment strategies for nearly two decades, and my successes can be directly attributed to it.

The last time I focused on this investment was in January of this year, in a publication titled “NetApp Inc.: Chart Suggests That NTAP Stock Can Go Nuclear.” In that publication, I outlined developments which suggested that the stock had tremendous potential and that a price advance was in order. These indications stood true to their nature because NTAP stock has appreciated to the tune of 23.73% since then.

The indications on the following NetApp stock chart are suggesting that the bullish trend towards higher stock prices is set to continue.

NetApp stock chart

Chart courtesy of StockCharts.com

The quintessential characteristic that defines a bullish trend is higher highs and higher lows. Constructive price action creates this exact price action.

To clarify, constructive price action consists of impulse waves and consolidation waves, and both of these waves are highlighted on the chart above.

Impulse waves define the stage in a bullish trend when the stock price stages a bullish advance that is characterized by a linear appreciation of the stock price, which exhibits little or no pullback. Consolidation waves define the stage in a bullish advance when the gains that were created in the preceding impulse wave are digested. This price action is necessary because it serves to alleviate overbought conditions, which then sets the stage for another impulse wave to develop.

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This constructive price action has effectively lifted the stock price from the lows at $19.95 that were set in January 2016, to where they currently stand at $45.00. This 125.56% return was the result of these waves alternating and feeding off each other, creating the necessary environment for a sustainable trend to develop.

This bullish trend was supported by a number of indicators, one of which was generated when the faster 50-day moving average crossed above the lower 200-day moving average. This moving average cross is referred to as a “golden cross,” and this indicator serves to suggest that a new bull market is in development. After this indication was generated, the stock price proceeded to stage an advance. The moving averages that created the golden cross remain in bullish alignment, reinforcing the notion that the bullish trend is still in development.

The 200-day moving average, which was essential in creating the golden cross, was tested on June 15, 2017. Testing the 200-day moving average from above is not an uncommon phenomenon, and the fact that buying pressure emerged as this metric was tested suggests that bullish tailwinds continue to swirl around this investment. This reinforces the notion that the trend remains pitched towards higher stock prices.

Shortly after the 200-day moving average was tested, NetApp stock proceeded to complete the consolidation wave by breaking out of it in an upward direction. This suggested that a new advancing impulse wave was set to develop. The move out of the consolidation wave failed to disappoint because the stock price appreciated very quickly, tacking on 10% over a seven-day span.

All these indications continue to support the notion that NTAP stock is geared for higher stock prices.

Bottom Line on NetApp Stock

I am bullish on NetApp stock because the indications on the NTAP stock chart continue to suggest that higher stock prices are on the horizon and that, therefore, a bullish view is warranted. I will remain bullish on this investment until new indications are generated which suggest that another view is warranted.