Want to know what to do with Qualys (QLYS)? Let’s run through the Power Cycle. (October 02, 2018)
QLYS
I want to look at Qualys ( NASDAQ: QLYS ) today; I am kind of tying it into something else. Qualys ( NASDAQ: QLYS ) will serve as a good example for what is happening here
Here’s the deal: There are distinct and discreet groups of market participants in any given stock. There are buyers, once they have bought then they become potential sellers. Then there are sellers and once they have bought they become potential buyers. Those are the four groups in any market.
What we are seeing here is, over the past three tops here, this is where the potential sellers, just a little bit below $100.00 but we will say $100.00, this is where the potential sellers have actually become sellers. Down here on these pullbacks, this is where the potential buyers have actually become buyers.
So there has been this give and take, I don’t really care much about that, but this one here. There has been this give and take, say $85.00 and $100.00 or $98.00, something like that, where the stock has been trading in a range and the potential sellers become sellers here, potential buyers become buyers here, this is the trading range of the stock. So we are at this kind of a crossroads where the stock is now right back down to where it was at this level; where every time over the past couple months the stock has rebounded at this level.
So, am I telling you to buy this stock? Absolutely not; I am telling you to watch this stock. If it does rebound, this looks like a top to me, frankly, it just does, it just seems like a top. Since 2017 it ran up over 200 percent, that’s a pretty good move here. And the way this has been trading the last few months it just kind of looks like a top to me. But what is your time frame? If you are a real quick, active trader you see the stock rebound off of here again, maybe you can take it for a couple dollars, a ride for a couple dollars. Again, it’s not my trade.
The reason I am saying that is because this is a lot of pain in the chart. Everybody who bought here, just over the last couple weeks, is a loser. And so those, they are buyers, right? They bought. Now they are what? Potential sellers. So I would be looking for a lot of selling to come into here and mute any rally. But still, you could get this run. You could get this stock to rally. But with the 50-day moving average rolling over; the 200-day moving average starting to flatten a bit, I would stay as far away from this stock as I possibly could.
If you are long the stock right now, and somebody watching this is, I don’t want to shake you out of your trade. But all I am saying is, as I look at this stock, it is looking like the potential sellers are becoming sellers faster and faster. And the potential buyers, they couldn’t wait for it hit the 50-day moving average before buying. Then it fell below the 50-day moving average and they bought right away. It didn’t move very high and then it fell again, oh, they bought right away, and then it fell again. They bought right away but they didn’t buy much and now this is down to another low here.
So will they buy? Maybe they will. But as you see this stock trade down through and then up to the 50-day moving average you could see that this prior support line here is now resistance. You want to stay away from this stock. This is a stock that was on our Growth Stock List at one point. I put this on here, strong numbers, really, really good numbers so we put it on here at 84.00. It actually turned out to be a pretty nice trade, it went up about 20 percent, but now that trade is done.
This is the type of analysis that I would be doing off the top of my head, actually, out through the tip of my mouth, it is the type of analysis that I would be doing in my head when I am considering whether to buy a stock. So I have done that analysis and I am telling you: I think, if you are buying this potential rebound you better be out quick. But ultimately, this stock looks like it is going lower.
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