Virtusa Corporation (VRTU)

Company

vrtu(2-2)_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." (company website)

vrtu(2-2)
VRTU 6-month chart

Buy

This is my second attempt to make money from Virtusa; the first ended with a loss when I bailed too soon. Having consulted the entrails of a blind goat and found them more encouraging this time, I am stepping in again. VRTU has formed a distinct symmetrical triangle, and in the wake of earnings that beat Expectations, has assaulted the upper trend line with very high volume in the past two days. My theory is that this is a breakout in the making.

  • Percentage price oscillator (PPO) — converging on the signal line, about to cross above
  • Volume — latest price moves on very high volume

Based on technical analysis, MarketEdge does not follow VRTU.

Sell

gain Bottom line
26%

VRTU peaked last week at $9.48, and when it sold off today my stop-loss order was triggered. The price dropped right through my stop, and it took nearly 3 hours for the trade to execute; the shares finally sold in odd lots just a couple of minutes before the close of the market.

The PPO line started to converge noticeably during Friday's session, so I was not surprised to see today's sell-off. I'm sure it will be called "profit-taking" since the stock has had a great run-up in the last couple of weeks.

I'm happy about this transaction on two accounts: First, the breakout from the symmetrical triangle actually materialized. Second, although I left some money on the table by waiting for the stop to kick in rather than a pre-emptive sale early in the session, the returns are not at all shabby.