McGuireTO

PVTL finding its bottom - a fundamental play for me

NYSE:PVTL   PIVOTAL SOFTWARE INC
PVTL is a company I like fundamentally. I'm a software engineer and I've developed on their platform Pivotal Cloud Foundry, and I do like it. I know the decision makers at that former employer also really like the platform. I'm of the opinion that these guys will be a prime target for an acquisition by Amazon. I have seen absolutely no indication that this would ever happen, but knowing what these guys do and watching the direction they've taken, I believe it would make perfect sense if it happened.

When I saw the gap down over-reaction to earnings last month I bought a long term position after hours, and ended up selling it a couple days later for very small profit when it was clear the chart was going to break down to lower lows.

Now that PVTL is building a base of support in the $19 range I'm starting to get interested again in making a longer term swing investment. Thursday was a daily inside bar that broke bullish on Friday and even closed above the IB resistance. I didn't play that because of the IB bullbreak fake-out on October 1st. It is worth noting however that Friday did the opposite - it had an IB bearbreak fake-out.

I'm also noticing some potential bullish divergence here on the RSI and MACD , where the price is making lower lows and the oscillators are making higher lows (this is much more evidence on the MACD ). The last daily lower high is is 19.93, call it $20 psychological, although a riskier play would be to get in a little early on the break of 19.68 because of the divergence I just mentioned.

Looking at the 4hr chart, breaking 19.68 would also change the 4hr trend, giving us a new higher low and higher high. I personally feel comfortable taking that trade, as I believe $20 will easily break if the 4hr resistance breaks on big volume .

The next daily resistances are at 20.11 sand 20.19 - there is a clear band of resistance in the low $20 range so a more patient and risk-averse trader may choose to hold off until all of those resistances break.

When the daily oversold bounce does start to play out we will be looking for a lower high on the daily compared to 23.95.

Key range: 18.45 - 19.68
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