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Dave & Donald Moenning

Mr. David Moenning is a full-time professional money manager and is the President and Chief Investment Officer for his Chicago-based Registered Investment Advisory firm, Heritage Capital Management (...

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Product Performance

Planning For A Breakout With Shutterstock (SSTK)


Internet Software & Services has been the place to be in 2013.

In addition to Shutterstock (NYSE: SSTK), just take a look at these constituents of this red-hot sub-industry: Pandora Media (NYSE: P), Facebook (NASDAQ: FB), j2 Global (NASDAQ: JCOM), Yelp (NYSE: YELP), CoStar Group (NASDAQ: CSGP), LinkedIn (NYSE: LNKD), etc. The list of superb stocks in the Internet Software & Services space goes on and on.

Focusing on stocks in the top-performing sub-industries usually helps bullish trades, so today, let's take a closer look at Shutterstock Inc for a short-term long trade.

While the +176.61 percent YTD figure on SSTK is a cause for concern, the stock's technical chart on a daily basis presents a favorable entry opportunity and enough upside to take a shot on this high-flyer. SSTK doesn't report earnings until November 14, so there is no reason to expect heightened volatility until then, despite the weekly chart being extended.

SSTK went through a modest consolidation phase from mid-July through early September, but has since made a strong push to the upside, breaking through old resistance and establishing another leg higher on its long-term up-trend.

SSTK recently hit highs of $76.07 at the open on Friday. While this is some immediate upside potential, the stock seems to be forming some resistance right at $76 (see: early October, last Friday), struggling with that price this month.

Considering strong intraday action this afternoon or a continuation of buying activity into tomorrow could easily have SSTK testing this resistance, picking up the stock at current prices and playing for a technical breakout in the short-term seems like a relatively high-probability bet.

Given that SSTK is pretty much parabolic on a weekly basis, it is probably best to give the stock a tight leash with a stop at $70.02 while playing for a short-term breakout.

Internet Software & Services stocks have been consistently great this year, so any opportunity to enter should be viewed as a good opportunity.

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When to Consider Entering the Trade:
At the current price (~$73.32).

When to Consider Exiting the Trade:
At a close below $70.02 (Breakdown) / A close above $76.07 (Profit-Taking)

Disclosure: At the time of publication the editor and affiliated companies own the following positions: None

Shutterstock Inc - Last 30 Days
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Shutterstock Inc - Last 3 Months
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Shutterstock Inc - Last 6 Months
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Posted in: Education Long Ideas Technicals Trading Ideas General