Tech Stock: Keep an Eye on This Company
I stumbled upon quite a tech stock yesterday, and I am intrigued about this possible investment candidate. This technology stock generates revenue from providing customers a cloud-based service that enables them to publish and distribute video content on the Internet. They boast having the most powerful online video platform and have an extensive number of partners in their ecosystem. The company in question is Brightcove Inc (NASDAQ:BCOV), and I have just added it to my list of tech stocks to watch.
Brightcove stock is a small-cap technology company. They boast a market cap just shy of $500.0 million, they have only been public for four short years, and they are one of the lesser-known names. I love these types of investment candidates because the upside potential is immense. Lesser known small-cap tech stocks have less analyst coverage and are less likely to be saturated within retail investors’ portfolios. As a result, when positions like this start to trend higher, it may take years before that saturation level is met. It’s a perfect tailwind to create a long-term trend.
The market cap and sector are merely the characteristics that define this position and place it for its appropriate category. The price chart is my single best resource in discerning a trend, and the Brightcove stock chart is the main reason I like this small-cap tech stock.
The following Brightcove stock chart illustrates the pattern that is alluding to further bullish implications.
Chart courtesy of StockCharts.com
BCOV stock has been trading with a negative bias within a descending triangle. A descending triangle is a consolidation pattern that has two converging trend lines. The trend line that represents support is horizontal, and the trend line that represents resistance is sloping downward. The pattern is complete when one of the trend lines is broken.
The power generated from these patterns is the result of the price coiling into a small confined space. The price bounces from each respective level and builds momentum each time the price is rejected by the trend line. When enough energy has been built up, the trend line breaks and the prices tend to surge.
In June 2016, the pattern was finally resolved to the upside when resistance was broken. When descending triangles break out to the upside, the first price objective is the peak at which the triangle began to develop. In the case of this technology stock, the initial price objective is $25.50 and, at the current price of $12.50, this objective still has much upside.
The following chart illustrates the new uptrend, and the signal reaffirms the breakout.
Chart courtesy of StockCharts.com
On April 18, 2016, BCOV stock generated a “golden cross.” A golden cross is a bullish signal that is produced when the faster 50-day moving average, highlighted in blue, crosses above a slower 200-day moving average, highlighted in red. Traders use this signal to confirm that a bull market is on the horizon; I call it the stamp of approval. It is wise to trade in the direction of this signal. A trader’s position should either be long or neutral. This indicator gave an investor plenty of time to assume a position prior to the breakout.
Shortly after the golden cross, Brightcove stock started trending higher. The trend line in this case is a power-up trend line and it represents an impulse wave. BCOV stock is surging higher in price and the price is confined to the trend line. A break of the trend line would indicate that the impulse wave is complete. Some traders will use the break of trend to exit and take profits from the trade.
Bull markets are defined by price action that is filled with impulse waves and consolidations. After this impulse wave is complete, I would be on the lookout for a setup pattern that would constitute a consolidation pattern. This pattern will give me insight into the next possible move.
The Bottom Line on This Technology Stock
BCOV stock is a small-cap tech stock to watch. It has many of the required characteristics that I look for in a possible investment. It is early in the investment cycle, there is much upside left until targets are met, and the general public is saturated with this tech stock. I will be awaiting the appropriate bullish setup before I act.
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