2 Tech Stocks That Could Fade Into the New Year

Both AKAM and SYMC have approached historically bearish trendlines

Managing Editor
Dec 12, 2018 at 12:06 PM
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Despite today's gains, the tech sector has been stumbling into the New Year, still reeling from October's sell-off. If history is any guide, there could be more trouble ahead for cloud concern Akamai Technologies, Inc. (NASDAQ:AKAM) and cybersecurity name Symantec Corporation (NASDAQ:SYMC), both flashing bearish signals heading into 2019.

AKAM Headed Toward Familiar Resistance

Akamai stock, at last check up 1.8% to trade at $68.76, is now within one standard deviation of its 80-day moving average. Over the past few years when encountering this trendline, AKAM went on to average a one-month loss of 8.9%, and was higher just 20% of the time, per data from Schaeffer's Senior Quantitative Analyst Rocky White.

A move of similar proportions would put Akamai stock back near the $62.50 level, an area that has contained pullbacks all year. Three straight wins this week has helped put AKAM above its year-to-date breakeven level, although that 80-day trendline, which has served as resistance since mid-September, still looms overhead. Longer term, the equity hasn't had a monthly win since July. 

Daily Stock Chart AKAM

In the options pits, the security's Schaeffer's put/call open interest ratio (SOIR) comes in at 0.37, which ranks in the lower 6th annual percentile. In other words, options traders seem relatively upbeat, with data showing a higher-than-normal preference for near-term calls over puts.

SYMC Showing Signs of a Slowdown

Looking at Symantec, the stock is within one standard deviation of its 200-day moving average, after a lengthy stretch below this trendline. Over the past three years, there have been four similar run-ups to this moving average, after which SYMC went on to average a one-month loss of 7.19%, and was higher just 25% of the time, per data from White.

Daily Stock Chart SYMC

Symantec stock at last check was up 3.6% at $23.12, so a pullback of similar magnitude would bring it back near $21.50, a region that's been somewhat supportive recently. SYMC bounced nicely off its late October lows near $17.50, but has still shed nearly 18% in 2018. 

The sentiment in the analyst community is tremendously bearish. Of the 22 brokerages in coverage, 21 rate SYMC a "hold" or worse. What's more, the stock's average 12-month price target of $22.65 sits right at its current perch. This indicates that another pullback from the cybersecurity name won't catch analysts off guard and result in bear notes. 

 

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