NetApp Inc. (NASDAQ:NTAP) - $40 & $43 Are The Levels To Watch

Denver, CO, 08/09/2013 (Avauncer.com) – NetApp Inc. (NASDAQ:NTAP) (Closed: $42.45, Up: 1.80%) opened strong on Thursday and spent the rest of the session flat at the elevated levels. The volume at 11 million was higher than the average of 7 million, the most of which came in the opening.

The stock had an amazing bull market in the period of 1997 to 2000, when it went to top at $152 from the insignificant low of $1. But the bear market of 2000 – 2002 saw it losing about all of its unbelievable gains in just 2 years. It bottomed out at $5.18 in 2002 and began its recovery. It made a higher high in 2006 and a higher low in 2008, firmly establishing an uptrend according to the classical Dow Theory. The 2011 top at $61, also the 38.2% retracement level of the entire fall, re-confirmed it.

The subsequent correction from the 2011 top made a very interesting pattern discovered by Glen Neely, called a Diametric. This pattern consists of 7 legs or two triangles, one expanding and the other contracting, connected by a middle leg. The legs on the opposite side of the middle one, usually marked as CD, often tends to have symmetry with each other, both in the price and time. All these things are seen in the correction from the 2011 top to the 2012 bottom. The price broke out of this pattern in December 2012 when it crossed $32. The next price action created a pattern called a Cup & Handle. Often the handle forms a mini Cup & Handle itself and this case was not an exception. A move above $36 confirmed the breakout and gave us targets of $41, already achieved and $47, yet to be reached.

In the short term, a move above $43 would give the bulls a lot of momentum. A failure to cross this level convincingly could bring a correction to $40 - $41 levels, serious damage only below that.