Stocks To Watch For May 12, 2014

Gigamon Inc GIMO continued its bullish momentum on Friday, topped at 16.91 but closed a little bit lower at 16.81. The good news is that the stock closed above the 13-day EMA for the first time in more than a month. There are no changes in my technical outlook, the bias remains bullish in short term testing the 18.1 area as a part of the rounding bottom (bullish reversal pattern) scenario that i published few days ago (using the 2h chart). GIMO has a high level of short-interest (8.59 % of Float) and is cheap by valuation IMHO. A clear break above 18.10 next week could trigger further bullish pressure testing 20, because the short sellers will start buying to cover their position. Momentum indicators are slightly bullish now with RSI inching away above the oversold level. The strongest sign of a bullish momentum is the MACD indicator which has just started to increase and the CMF is also showing positive signs on the stock. This company has no debt and about $142.6 million of cash, so they have about $4.50 a share in cash. The stock got upgrades last week and was positively mentioned as possible takeover target (Cisco, Brocade, Juniper, Oracle and others as potential suitors). I love the risk/reward so long as it holds above the $15 area and expect to see a strong upside move very soon.