This undiscovered IPO is about to about to break out.
This is one of those “behind the scenes” companies responsible for enabling large companies to operate their businesses securely in the cloud.
Click here to discover this opportunity before it moves
A simple strategy for trading IPOs that have been trading for less than 2 years is to look for consolidation patterns over the IPO price that breakout to new highs.
This works even better when it’s a company that is not a well known brand, because as it moves up more people will hear about it.
This is the situation with Zscaler (ZS). This is not a household name because it’s not a company that the consumer would use.
However, its stock is attracting enough attention to push it up to all-time highs while the market indexes still sit near their 200-day moving averages.
There are 3 bullish patterns in the chart below.
- It gapped over its IPO range in June of 2018 then consolidated between $34 and $44. This is a bullish base for a big move higher.
- When the markets sold off sharply from October – December of 2018, ZS just traded sideways. This demonstrates its strength.
- On Jan. 31st it broke out to new highs and has since consolidated above that breakout. This is a bullish breakout pattern.
The breakout trade setup here is to wait for a new high breakout over $51 and put a stop under $48.
If it doesn’t breakout, and instead corrects to the $45 level that would also be a good area to look for a long trade, but right now it looks more likely that it will go higher.
The exciting part of trading IPOs like ZS that have not had a big trending move off their IPO price is that if you catch them as they are just getting started you can get in early on big moves.
However, you do have to be disciplined about using stops! When IPOs breakdown they are even riskier than well-established companies.
Rick Nartarian, Chief Investment Officer
The American Investor Daily