Cybersecurity stock Akamai Technologies (NASDAQ:AKAM) has shed pulled back sharply since reaching a 26-year high of $165.45 on May 13. However, the historically bullish 126-day moving average could provide a springboard for a short-term bounce.
According to Schaeffer's Senior Quantitative Analyst Rocky White, AKAM is trading within 0.75 times the 126-day moving average's 20-day average true range (ATR), after spending at least 80% of the previous two weeks and 80% of the prior 42 trading sessions above that trendline. This setup has appeared nine times over the last decade, after which the stock was higher one month later 67% of the time, averaging a 7.8% gain. A similar move from the stock's current perch at $113.85 would put it at $122.73.
Short covering could provide an added layer of support, as short interest represents 14.1% of the stock's available float. It would take shorts nearly four days to buy back their bearish bets, at the stock's average trading pace.
