SYMC Stock: Weakness is Welcomed
It’s that time of year again when kids have gone back to school, traffic has become a nightmare, and equity markets log their worst-performing month of the year. When selling becomes the order of the day, even the best performers, like Symantec Corporation (NASDAQ:SYMC), get hit. Portfolio liquidation is not a discriminating process, and very few names can actually withstand the selling pressure that follows, even Symantec stock.
As much as the media describes this annual event as bad, it acts as a catalyst on many levels. Many stocks have run hard this year and are posting positive gains, but are overbought on many metrics. Market weakness unwinds the problem associated with overbought stocks and sets the groundwork for further gains.
Symantec stock has had an outstanding run this year and has achieved my original price objective of $24.50. The following chart illustrates the importance of this price level.
Chart courtesy of StockCharts.com
Symantec stock is attempting to make a new all-time high. This chart illustrates the duration it took for shares to finally make an attempt at that price level; 12 years separates these peaks. If SYMC stock can finally muster enough energy to break out, the sky will truly be the limit as new all-time highs are known for explosive moves to the upside. I can easily argue a move to $39.00 based on this pattern, but until the breakout occurs, I am probably just wasting my breath on this type of speculation.
Symantec stock has just bounced off a major level of resistance, and the timing of a pullback is lining up directly with the time of year that is known for weakness. I am not expecting a break above this level on the first try. The pattern above can be constructed to look like a very large cup. If this is the path that SYMC stock is going to take, then a handle pattern is needed to complete a possible bullish cup and handle formation.
In order for the cup to form, the price of Symantec stock needs to fall from current levels. The following SYMC stock chart illustrates levels of support that are worth watching, and which are applicable to a possible handle formation.
Chart courtesy of StockCharts.com
The horizontal level of support lies at roughly $21.00. Prior to being a level of support, This level acted as a level of resistance for approximately three years. It took three attempts to finally overcome this hurdle. As is always the case in charting, when a level of resistance is finally overcome, it becomes a level of support. It is not uncommon for share price to trade back and test this level from above.
A backtest of this level would also be key in constructing the necessary handle segment of the potential bullish cup and handle formation.
My expectations of weakness are further substantiated regarding the distance that Symantec stock is trading above its 200-day moving average. SYMC stock is trading way above this level ,and may be a sign that, in the interim, the move to the upside is a bit stretched. A pullback is needed to alleviate any extended metrics.
The Bottom Line on Symantec stock
SYMC stock has reached my initial target at $24.50, which marks the previous all-time high set 13 years ago. I do not see this level broken on the first try, and a dip to test levels of support seems like the optimal path, given the seasonality of this market. If this does occur, a potential bullish cup and handle formation would be in play and would reinforce my bullish premise on Symantec stock.