4 'cloud' stocks poised to break out

Cloud computing is still part of the game.

By Stock Traders Daily Mar 1, 2012 1:55PM

Image: Clouds in a blue sky (© Purestock/Getty Images)One of the hottest sectors in the stock market so far this year has been technology. And investors have been particularly interested in "cloud computing." 


Cloud computing is simply the process of providing software programs, data, and storage space remotely, through servers that are not operated by the customer. 


The benefits for a business are evident from both a time and cost perspective. Businesses can get applications up more quickly and with less maintenance, enabling them to shift IT priorities to meet changing demand. The company also doesn't have to spend large sums of capital to purchase servers to host data.


Given the clear advantages, businesses have been rapidly adopting cloud-computing services. This, of course, has driven strong growth for companies that provide these services, causing investors to flock towards them. 


Here are a few stocks that, from a technical perspective, look primed for a break-out:


EMC approaching levels not seen since dot-com era


Since EMC (EMC) reported upside fourth-quarter results on Jan. 24, the stock has been on a tear, up nearly 20%, and approaching the key $28.50 area. This price level acted as a resistance zone in May 2011, as well as in April last year. The stock seems to be on a collision course with $28.50 once again. If it can successfully breach that price zone, an upward extension could be in store, and the stock could be trading at its highest levels since the summer of 2011.


RAX just off all-time highs


Rackspace Hosting (RAX) is another stock that enjoyed a sizable pop after delivering strong fourth-quarter results. On Feb. 14, the day after it reported, the stock spiked to all-time highs on a huge surge in volume, closing at $55.45. Since then, however, it has cooled off a bit, and is now trading in the $52 to $53 area. This minor pull-back and accompanying sideways pattern can be viewed as a healthy consolidation movement. The stock also may be forming a support base around $52, which would limit downside risk from here.


Citrix Systems threatening key resistance area


Shares of Citrix Systems (CTXS) are trading just below $76, which represents a very important area of resistance for the stock. On three occasions over the past few months the stock has attempted to break through this level, but failed to confirm the move: Oct. 27, 2011; Nov. 16, 2011; Feb. 15, 2012. The general rule of thumb is, the more times a stock fails to break through a key level, the more significant the move to the upside will be when it finally happens. Because of this, CTXS is worth having on your radar.


CNQR soaring towards all-time highs


Another stock eyeing new all-time highs is Concur Technologies (CNQR), a provider of travel and expense services through its "Concur Connect" cloud-based program. Shares closed at all-time highs on Feb. 24, and have been essentially flat since then. Given its clear strength and proximity to all-time highs, another push upward seems likely.


See here to access our more in-depth trading reports on these stocks: EMC, RAX, CTXSCNQR. These trading reports provide traders will all the key technical levels of interest, helping traders to lock in gains while limiting downside risk exposure.  


 

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