Networking Stocks Break Out While Cisco Struggles
The charts show that smaller players such as Juniper, Infinera and Arris just scored technical breakouts.
Infinera ( INFN ), a provider of digital optical networking systems to telecommunication carriers, sports both short- and long-term breakouts on its chart (see Chart 2).
Last week, Infinera stock moved above resistance from several highs since September. And since the October low, several indicators from relative performance to on-balance volume turned significantly higher to suggest the stock is in much better shape.
However, what may be surprising following a greater than 30% price decline between August and October is that the jump higher last month on a third quarter earnings beat was also a long-term technical breakout. The decline from August left a bullish flag pattern on long-term charts, so named for its appearance of a flag flying on a flag pole. A move above the upper border of the pattern suggests that the prior trend, which was up, is resuming.
I would submit that ANET made a similar breakout today. Maybe there is something to the Barron’s headline about Cisco’s struggles benefitting some networking vendors. I believe that Arista is taking more share from Cisco than the ones Barron’s mentioned.
I would submit that ANET made a similar breakout today
My 2 cents, which is worth about a penny.
I would sumbit slightly differently. For ANET, I do like that it moved above the 200dma on a 3.56% move on slightly higher, but below average volume. That is good, but I don’t consider it a breakout. It has more work to do to build a real base and have a real breakout. I think this would be considered a base-on-base since the last base never broke out and never went 20% above previous highs. Therefore a “true” IBD breakout would probably be a move above the old highs of Sept 2014. But I would also take a high volume move above $88.56. It needs to show good accumulation while building the right side of the base to improve the probabilities of success.
Last week, Infinera stock moved above resistance from several highs since September…
last month on a third quarter earnings beat was also a long-term technical breakout. The decline from August left a bullish flag pattern on long-term charts, so named for its appearance of a flag flying on a flag pole. A move above the upper border of the pattern suggests that the prior trend, which was up, is resuming.
For INFN, I really like the chart and posted a response to Gator in the SEDG thread.
yes it moved above the major trendlines which is positive and used by some to buy. I don’t mind nibbling more when that happens. It did shoot above them late Oct with a short term peak of $21.14 That was a very nice move above a trendline on high volume. Gave most back the next day but on lower volume. It climbed back above the lines and has slowly moved up to the short term peak of $21.14 I can see a flag there and it did move above it, but sneaking above it slowly on low volume is not a breakout in my book. It is within 15% the highs so is near enough to watch closely for a breakout. I see a Cup with a peak of $25.24, but I would look for a handle to form and then a break out from there for a slightly higher probability of success.
Regardless, the 1YPEG and growth fundamentals are good enough to buy without chart considerations
Chart, chart, chart, blah, blah, blah. Fundies, undies ice cream sundaes