Shares of VeriSign (NASDAQ:VRSN) $17.78 -17.6% lead software shares lower today after the stock was downgraded earlier in the session by SoundView to "buy" from "strong buy" citing increased risk that domain name business (30% of VRSN revenues) due to data from SnapNames showing another month of domain name deletions.
Shares of VeriSign (VRSN) have broken to a new 52-week low today and have also broken below the mid-point of our regression channel.
VeriSign Chart - Daily Interval
Yesterday's "triple-bottom" sell signal at $22 on VRSN's point and figure chart looked bearish and today's follow through on SoundView's downgrade added insult to the injury. Current vertical count from the point and figure chart is growing at $8.00. Traders looking to short/put the stock should most likely not chase the stock here, but look for a rally on some type of "upgrade based on valuation" near the $20-$22 level as an entry point. It's interesting to note some of the "average levels" of price on the chart of VRSN and price action that took place in relation to the downward channel of regression.
Kronos Inc. Chart - Daily Interval
I mentioned Kronos (KRON) as a potential short/put candidate after the stock had gotten "whacked" to the $36 level (then bearish vertical count). The stock has started to "roll over" and volume has started to dry up. Volume indicates that institutions may have flushed the stock back on 04/09/02 and may not be around to support another decline. Good looking put/short play with a stop just above the recent rally high and 38.2% retracement of $42.87. Near-term target is old lows of $36. Stocks can always exceed their vertical counts and I think KRON may eventually do that longer-term. However, will trade the first target of $36 as outlined and monitor over time.