Thursday, 22 October 2015

Momentum Alert – VeriSign Is Heading South

VeriSign, Inc. (NASDAQ: VRSN)
Technology; Internet Information Provider; Sell

The company's stock is trading at its two year high. Standard moving averages are demonstrating a bullish momentum. But, SMAs, as an indicator, fail to indicate reversal. That's where RSI comes in. VeriSign touched an RSI of 70 a few days back, which is an indication that the stock is over-bought. But, more importantly, the chart is demonstrating bearish divergence. See the chart below:

    
The chart clearly depicts a bearish divergence, which is a strong reversal indicator. We think that it's time to take profits and stay at the sidelines. VRSN is also announcing, today, its earnings for the quarter ended September, 2015. It's wise to stay on the sidelines as soft guidance can hurt the stock price given the technical position of the chart.