Well that turned out to be a good short (falling from $70+ to $65), but that could be over and here is a longer term perspective from Investopedia
Akamai Could Lead Tech Higher in 2017 (AKAM, GOOGL)
Akamai Technologies Inc. (AKAM) could emerge as a 2017 market leader after completing a multi-year test at resistance in the mid-60s. That uptrend is likely to draw wide attention, given the stock’s long-held reputation as a poster child for the Dot.com bubble. Even so, choose exposure levels wisely because getting it wrong by a few dollars could undermine risk management.
The rally bodes well for other links in the content delivery network (CDN) chain, including Alphabet Inc. (GOOGL), who is partnering with AKAM as a direct challenge to Amazon.Com Inc.’s (AMZN) AWS CloudFront platform. Fortunately, this fast growing tech niche has room for a basket of winners, telling us to avoid the betting mentality popularized in tech blogs and journals.
AKAM Long-term Chart (1999-2016)
The company came public at $200.50 in November 1999, right at the height of the Dot.com bull market, and climbed three stair steps to an all-time high at $345.50 on the first trading day of the new millennium. It then eased into a trading range with support at the IPO print, ahead of a March breakdown that triggered a historic downtrend, dropping the stock to 56-cents in October 2002. That marked a 98.4% decline from the rally high.
The stock joined other world markets in the 2003 to 2007 recovery wave, ticking higher in two broad buying waves that lifted price to 59.69 in February 2007. Aggressive sellers took control into 2008, triggering a choppy decline into the 20s, followed by a vertical plunge during the economic collapse. The downside finally ended in single digits in November, after long-term shareholders have been shell-shocked by catastrophic losses for the second time in eight years.
The stock rallied within five points of the 2007 high in 2010 and rolled over, posting a higher 2011 low, ahead of renewed buying pressure that took more than two years to reach the 2010 high. The rally continued into the 2007 high in 2014, yielding a yearlong sideways pattern, followed by a 2015 breakout that ended in the upper 70s. The subsequent pullback failed the breakout in November, triggering a deep slide to a 3-year low, followed by a bounce that’s just remounted new resistance in the mid-60s.
AKAM Short-Term Chart (2014 - 2016)
The 2014 range crisscrossed the 2010 high (blue line) repeatedly and broke out to 15-year high in February 2015 but momentum stalled quickly, triggering a topping pattern, followed by the fourth quarter breakdown. That reestablished resistance in the 60s, with this week’s breakaway gap mounting that zone on heavy volume. That rally reached resistance at the .786 Fibonacci selloff retracement level quickly, triggering a reversal that’s consolidating recent gains.
The rally also entered the unfilled October 2015 gap between $63 and $75. That conflict zone will repel rising price until fully mounted, predicting whipsaws that could yield a test and buying opportunity at new support in the lower 60s. However, there are no guarantees the breakaway gap will fill before an assault on the 2015 high, while a breakout above that level could trigger a strong momentum wave into triple digits.
On Balance Volume (OBV) rolled over in April 2015, a month before the top, and entered an aggressive distribution wave that ended in January 2016, a month before the bottom. It tested the low in May and August, holding support ahead of this week’s massive uptick. Accumulation is now in tune with price, but the stock will require significant additional buying pressure for a successful breakout into the 80s.
The Bottom Line
Akamai completed a major bottoming pattern this week, gapping up to a 52-week high while reinstating a 2015 breakout through the mid-60s. The stock has now entered a period of consolidation and testing, with lower prices offering low-risk buying opportunities.
