Welcome to Fairlead Strategies Idea Generator! This is our forum for trading ideas to supplement our existing research. We will present annotated stock charts with rationale, technical targets, and stop losses, always following up on “open” ideas.
We offer the ideas for free to our research subscribers (please visit www.fairleadstrategies.com for more information). Otherwise available for a small monthly fee for 3-4 actionable stock ideas per week and occasional thematic commentary. Our free service will consist of occasional trading ideas and abbreviated commentary.
At times we will add technical color around fundamental comments from our esteemed friend Austin Hankwitz whose perspective we value highly. Today we delve into his recent feature regarding cybersecurity stocks, providing a technical perspective.
The cybersecurity industry has been a long-term source of outperformance for investors, conveyed by the weekly bar chart of the First Trust NASDAQ Cybersecurity ETF (CIBR), which shows a healthy long-term uptrend supported by rising trend following gauges, such as the 200-day (40-week) moving average and weekly cloud model (a/k/a Ichimoku), pictured below. However, small- and mid-cap technology stocks more broadly have come under pressure recently in a top-down headwind for the cybersecurity industry. The loss of momentum warrants more volatility in the space in the near term.
First Trust NASDAQ Cybersecurity ETF (CIBR)
Please have a read of Austin’s fundamental take on cybersecurity…
The best long-term technical setup in the industry we have identified is FFIV, which broke out to new highs last month in a continuation of its long-term uptrend characterized by positive momentum per the monthly MACD indicator.
The monthly stochastic oscillator indicates long-term overbought conditions are in place, but positive long-term momentum can help FFIV absorb those conditions via consolidation, eventually allowing for continued upside follow through.
Relative to the broader market (i.e., S&P 500 Index), FFIV has underperformed slightly, but it looks as if the ratio of FFIV vs. the SPX is in a basing phase that may lead to a period of outperformance in 2022.
Support for FFIV is strong near $216, defined by previous highs and the rising 50-day MA. A long-term objective from November’s breakout is approximately $274 based on the trajectory of the uptrend.
F5, Inc. (FFIV)
Stay tuned for forthcoming trading ideas…