Thinking of moving into CASA? Consider this first. (February 28, 2018)


I want to just take a quick second to look at Casa Systems ( NASDAQ: CASA ). A great company; as you can see a recent IPO. It has got a lot of play, the fundamentals are really, really solid. In fact, it is in Investors Daily 50 stock and those things always get a lot of attention. You can see what happened, this is a daily chart. Yesterday the stock broke out above this high here, so we have two breakouts right in a row. We got a breakout yesterday, Boom! Above 21.32 and then the next day, which is today, it broke out above that level and really ran up nicely.

But here is the thing: This is, in my view, it is a stock that you want to hold for a while because if we look here at the ultimate low and then here at the ultimate high of that initial run, that is $8.00, it is also about 60 percent. But we can take that $8.00 and just extend it upward and get essentially $30.00 as an upside target on this stock. That is really what I would be looking at, which if the stock is up at 25.00 you can think, “Well, $5.00.” Dude, it is a $25.00 stock. So if you take $5.00 on $25.00, I’ll take that 20 percent any day. From 22.78, I would love to take that too.

The thing is though, this was a day it looked like this was really, really looking solid (here, this is today’s), it was really looking solid in the morning. I think it sucked in a lot of people, I bought some more, and then the stock started tailing off and now it has formed what you would call a tombstone doji, which is every is every bit as ominous as you might think. It is printing high on volume here and we still have about 30-minutes to go in the market. So this volume will probably hit yesterday’s volume numbers; so it looks like a short-term blow off or a climax reversal.

What I would suggest doing is, just waiting and watching this stock. If you have been looking for an entry, this isn’t it. This isn’t your entry; if you bought this morning, okay fine, maybe that is still not your entry. We could see this stock pullback a little bit more. The breakout test would not be yesterday’s close of 22.53. It would actually be down here at 21.32. You really need to give this stock room to settle in a little bit.

After the way this thing has traded today, frankly I think we are going to see several days of backing and filling, just kind of trading around, no real exuberance one way or another; between buyers who just really want to get all the stock even if they have to pay up for it or sellers who just want to dump it even if they have to get less than they want for it. I think you are probably going to see this equilibrium right here.

So my suggestion would be, just watch Casa Systems ( NASDAQ: CASA ); just watch it. If you own shares just be aware that this stock could pull back 10 percent and there would really be nothing wrong with it, it just would have been a fake-out breakout here. Anyway, that is my take on Casa Systems ( NASDAQ: CASA ).

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