Shares of Akamai Technologies (NASDAQ:) are in full breakout mode this morning. The stock is trading at new 2020 highs with the help of a 3% gain. This impressive move follows an eight-week consolidation above a very solid support zone. Back in early July, AKAM surged more than 6% on heavy trade after receiving an upgrade from Cowen. We highlighted it here. The stock opened the July 2 session with a powerful upside gap but was unable to make any further headway over the next eight weeks. During this phase the stock gave back little ground as support near the July 2 gap ($107.00) held multi-week lows in late July and August.
With solid footing underneath and a nice tail wind (AKAM is working on its ninth straight gain) we believe a fresh rally leg is on the way. Shares are far from overbought (MACD at neutral) due to the post July 2 consolidation. The all-time highs are a long way from here. Just a few weeks after its IPO in late 1999 AKAM reached $345.50 in January of 2000. By the third quarter of 2003 AKAM was changing hands for under a buck.
New support levels are now in place. The $116.50 to $115.00 area marks the multi week July highs. On the downside, a close back below $110.00 would be a clear warning sign that more consolidation will be needed before AKAM can mount a sustainable rally.
At time of publication we are long AKAM in some managed accounts.
Gary S. Morrow’s original post can be seen here.
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