On My Radar Today - Solarwinds, Inc. (NYSE:SWI)

Posted on by The INO.com Team

Today, I'm going to be analyzing the stock of SolarWinds (NYSE:SWI).

SolarWinds, Inc. designs, develops, markets, sells, and supports enterprise-class information technology (IT) and infrastructure management software to IT professionals in various organizations worldwide.

Solarwinds SWI Analysis

The most outstanding chart feature to me is the 10-month long term downtrend line, which has seen a breakout to the upside. This trend line touches three price points, making it a valid and important trend line. The RSI is trending over the midpoint 50 line, indicating a strong trend. Plus, all of the Trade Triangles are green and positive.

Another important key element to this chart is a Fibonacci correction from the low for this stock in July of 2010 at $12.50 (not shown on chart) to the highs that were seen just over the $60 level in March of 2013. The subsequent correction was picked up quickly by the monthly Trade Triangle, which kicked in at $52.06 on April 11, 2013. After almost 10 months of a bear trend, the monthly Trade Triangle reversed course and trend on January 6, 2014 at $39.15. I believe that Solarwinds has completed a major Fibonacci correction around 60% and I am expecting a move back up to around the $50 mark, which would be a nice return on capital.

CHART NUMBERS LEGEND
1. Trade Triangles all positive
2. Trend Change at $26.43 on 10/27/11
3. Pivot point
4. Double top
5. Trend change at $52.06 on 4/11/13
6. Classic trend line touching 3 points.
7. Major Fibonacci retracement
8. RSI trending over the 50 line.
9. Trend change at $39.15 on 1/06/14
10. Breakout over 10-month downtrend line.
11. $45-$50 target zone

To summarize, I expect the current uptrend in Solarwinds to continue, unless I see otherwise in the Trade Triangle technology. If I am correct with my analysis, Solarwinds could potentially move up to the $45.00 to $50.00 level longer term.

Every success,
Adam Hewison
President, INO.com
Co-Creator, MarketClub

2 thoughts on “On My Radar Today - Solarwinds, Inc. (NYSE:SWI)”

  1. Interesting and promising stock for 2014. See the ten top Growth Stock Ideas for 2014 from Baird.
    Financials look good, total current assets ratio to total current liabilities of 1.8 and a ROE of nearly 20% is excellent.
    P/E of 32.81 is on the high side.

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