Virtusa (VRTU)

Company

vrtu(2-1)_1yr
VRTU 1-year chart

"Virtusa Corporation is a global information technology (IT) services company providing IT consulting, technology and outsourcing services. Using our enhanced global delivery model, innovative platforming approach and industry expertise, we provide cost-effective services that enable our clients to use IT to enhance business performance, accelerate time-to-market, increase productivity and improve customer service. We serve Global 2000 enterprises and the leading software vendors in communications & technology; banking, financial services & insurance; and media & information industries. We build and sustain application platforms for our clients that create competitive advantage." (company website)

vrtu(2-1)
VRTU 6-month chart

Buy

Shares of Virtusa had a big run-up in January in advance of earnings. Although there was a nice earnings surprise, price peaked and then gave back much of the gains. Beginning in early March, however, the uptrend resumed. Both moving averages have turned up, and VRTU is pushing at the upper Bollinger band in advance of earnings next week. A symmetrical triangle is forming; stocks near the point of such a triangle tend to break one way or the other. At the moment, VRTU is on the verge of a breakout. I'm hoping it materializes, but will have to protect myself in case of a breakdown.

  • Percentage price oscillator (PPO) — PPO has strengthened since March, and has again crossed above the signal line, veering sharply at the end of April.
  • Volume — January earnings were followed by a massive sell-off; this was probably profit-taking.

Based on technical analysis, MarketEdge does not follow VRTU.

Sell

gain Bottom line
-8%

Having unwisely ridden some stocks too far down recently, I put in a stop-loss order to trigger if VRTU lost 8% from my purchase price. For no apparent reason, VRTU today took a dive and the order triggered. There doesn't seem to be any explanation, except that earnings are to be announced tomorrow after the market closes, and people may be acting on their premonitions. That or they got up on the wrong side of the bed this morning. Whatever. I'm stopped out.

VRTU is still well-within the arrow pattern and just above the 50-day moving average. This could be a temporary thing and it will bounce back up — or it might not be, in which case I'm better off being out.