It's a slow start to the morning, so I wouldn't argue with traders or investors waiting to make positional moves. Earnings season is dying down, so we are going to move back to the influence of the macro scene: economic data, currency and any mergers that might hit the Street.
While the tech sector feels as though it has had a little more volatility and struggle this earnings season, F5 Networks (FFIV) appears to be setting up for a potential test of the 2014 highs, which would also put it within a stone's throw of all-time highs. The stock struggled at the beginning of the year, but has since filled a large gap. Not surprisingly, it stalled after the gap fill, but this little dip and push back higher is a bullish consolidation. This is what I want to see after a gap fill. A push right through the gap and higher can be difficult for bulls to hold. The move becomes too parabolic, but we don't have that here. What we have is more a cup-and-handle pattern, consolidating the move off the April lows. The depth of the cup and time to completion are on track to be considered proper.
There is nothing bearish with the secondary indicators. I would imagine a price closer below $120 would see the picture flip completely bearish, so that's the clear price stop in the short term. The biggest flag in the past has been when the Chaikin Money Flow (CMF) has been bearish and below -0.2 while seeing a bearish crossover in the slow stochastics or percentage price oscillator (PPO). The combination of these indicators offers a nice view of price in relationship to volume and past movements (trend and momentum). Currently, we are nowhere close to that event as all those indicators still sit bullish with only the PPO threatening a bearish crossover. I see that as more a reflection of price consolidation.
The weekly chart breakout potential in price ties in precisely with the daily charts. I'd prefer to see a close this week above $127.50 to trigger a breakout higher from the current wedge pattern of the last six months. This chart seems to indicate long-term investors should be willing to give FFIV about $10 to the downside before stopping out. Or, for those who don't like playing breakouts, $10 lower is where they want to buy FFIV. Again, we see the moving averages pushing higher in a bullish fashion while momentum and trend favor the buyers. I will note if the RSI and Vortex Indicator continue to push higher, but if price does not follow in the next few weeks, I would sit this one out and wait for a retracement in price to the lower support level of the wedge. Buying a very wide vortex indicator along with an overbought RSI has not been optimal recently. There is still plenty of upside on the RSI and MACD, but if price stalls over the next two to three weeks, I would focus on the lower support level of the wedge as I just mentioned.
Potential for a bounce at least to $135 is great, and potentially as high as $150. The chart looks great, but ask for just a little more before jumping in on the long side.