Software Play Programmed for Huge Run

03/08/2011 7:01 am EST

Focus: STOCKS

A bullish technical pattern is shaping up on this software stock, and the expected upside target is over $60 above current levels.

By Zev Spiro

The chart for Microstrategy, Inc. (MSTR) is showing that a macro bullish continuation, inverse head-and-shoulders pattern began developing in 2007. The pattern triggered with a breakaway gap on January 26, which stemmed from the 2010 4Q results.

The minimum expected price objective of the pattern is $182, obtained by measuring the height of the pattern and expanding higher by the same distance from the trigger point.  

chart
Click to Enlarge

After the macro pattern triggered, the price climbed steadily until a recent consolidation, which formed a bull flag pattern. Last week's breakout of the bull flag pattern provides a current buy-entry opportunity. 

chart
Click to Enlarge

Waiting for a pullback to the breakout level around $120 would have less risk, although it may not pull back to that level.

Target: $182 is the minimum expected macro objective

Protective stop: Confirmed move below the bottom of the flag, which is at $114.30

By Zev Spiro

If you have any questions or comments, please e-mail me at zevspiro@oripsllc.com with the subject line "moneyshow."

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