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I write often of the scans that I run on a nightly basis. There are a number of factors that are written into the scan, with most of them being daily technical analysis indicators.
While I use the scans frequently, I never just look at a stock being on the bullish or bearish list and then make a trade or form an opinion. I always look at other factors, such as the weekly chart, monthly chart and sentiment toward the stock. The scans are a starting point for me to do additional research. Sometimes the information found in the next layer of research leads to a different conclusion from what the scan is suggesting.
This is the case with Juniper Networks (NASDAQ: JNPR). Juniper appeared on my bearish scan last night, which started the process of reviewing the stock. When I looked at the daily chart, two things jumped out at me. First, the daily stochastic readings just made a bearish crossover. The second thing that jumped out was the resistance at the $25 level. See how that area served as support in mid-January before the stock gapped lower in late January? Now Juniper Networks stock has rallied over the last week and a half and the area is serving as resistance now.
If I stopped my analysis here, I would agree with the short-term direction suggested by the scan. However, I moved on to look at the weekly and monthly charts. What I see there suggests that a pullback will be short-lived.
On the weekly chart, we see a trend line connecting the lows from the past 3 ½ years. We also see that the weekly stochastic readings just made a bullish crossover – and look at what the stock has done when these indicators have crossed in the past. The bullish crossover has been a good indication that the stock is heading 25% higher over the next six months or so.
When I checked the monthly chart, the trend line from the weekly chart became the bottom rail of a channel, and the stock just bounced off the lower rail. If the stock rallies all the way up to the upper rail, that would likely take the price above the $34 level, since the rail is currently in the $33 area and it is upwardly sloped.
Juniper Networks could benefit from some negative sentiment changing to positive sentiment as well. At this time, 20 of the analysts covering the stock have it rated as a “hold,” and the other 10 have it rated as a “buy.” That’s after three upgrades already this year.
So my outlooks for Juniper Networks stock are as follows: short-term bearish for a few days to a week, but intermediate term and long term I like the stock’s chances of moving higher and would look to buy it now, with a target of $33 at the very least.
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