Here’s a great potential long trade on Zix, Corp (ZIXI). (September 11, 2014)
ZIXI
I think Zix Corporation ( NASDAQ:ZIXI ), it’s a cyber security firm, this is a pretty big move, this is a really good move. You can see what I’m talking about, and if you are keyed into the types of trading I do and the setups that I look for you’ll see this is one that’s kind of a textbook “Fitzpatrick” setup here. Volatility squeeze, not perfect but pretty good, sideways consolidation drawing the Bollinger Bands really, really tight together, and it’s consolidating near a key moving average, that’s the key thing here.
The 200-day is right up here, so I would rather this consolidation be happening here, verses somewhere down here, just because then there’s more overhead resistance; or certainly up here, because then it’s like already so far extended above the 200-day moving average, that really, how much more room is there for it to go? So when instead you get this happening right around the 200-day moving average, I mean I can see this stock going much higher than $4.00, so I wanted to bring this to your attention; nice high volume day today. I think you can get long Zix ( NASDAQ:ZIXI ).
Where would you put your stop? Well, it’s a $4.00 stock so it’s kind of a higher percentage stop than I would prefer. But frankly, if the stock falls back into this congestion down here I really wouldn’t want to be long. So you could keep your stop there, you might want to put it a little bit lower than that, or just kind of watch this during the day, because this is a heck of a move. I could see if there’s any kind of market weakness, I could see this stock coming down, triggering your stop, you’re out of the trade and then the stock goes up to 4.40 and we’re sitting here wondering what happened.
So I would just say, if the stock falls back into this congestion level then this breakout is kind of a “fakeout”. Frankly, the company’s growing, it’s got a year-over-year growth rate of 34 percent, it’s got a PE of 20, so the PEG ratio, that’s the PE over the growth, when it’s a fraction, that’s a really, really good thing; it’s 20 over 34, that’s a fraction, that’s a good thing, so from a fundamental standpoint this is a pretty good trade. I think there’s a lot here to like in Zix ( NASDAQ:ZIXI ), it’s in the right sector because there’s more money coming in to this cyber security business than ever before. So take a good look at this, I think this is going to work for you.
Free Chart