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Tickers in this Article: APKT, GLW, PWAV, BSFT
The communications equipment group has been hot and after a positive earnings report from Acme Packet, Inc. (Nasdaq:APKT) they could reach a boiling point. APKT has been a tremendous stock over the past year and has gained over 600% since the beginning of 2010. The number is even higher if you measure from its bear market low. To say this has been a market leader is quite an understatement and it seems anything remotely related to cloud computing remains in vogue.

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In looking at the chart for APKT, one can see that the recent move after earnings took the stock above its recent trading range to new all time highs. This caught many traders off guard as APKT looked like it was beginning to falter. APKT had dipped under $50 earlier this year and appeared to be topping out. However, this proved to be a bear trap and it appears that there are a healthy number of trapped shorts in this stock.




Another stock in the communications hardware sector that has been very strong is BroadSoft, Inc. (Nasdaq:BSFT). It also had a nice pop earlier this week and has cleared its recent base. This stock is less than a year old but is trading at all time highs. It had been in the process of consolidating its post IPO gains for several weeks and this weeks breakout comes on strong volume. Traders should monitor the $30 level for support on any weakness. (For more, see The Anatomy Of Trading Breakouts)




Corning Incorporated (NYSE:GLW) also has broken out on high volume. GLW had been building a base for over a year before finally clearing resistance in late January. It has followed through rallying into the $23 level. GLW is quite extended at this point so it is likely not a good idea to chase this stock higher, but overall the chart looks very healthy at this point. The $20 level would likely act as a significant support level on any weakness.




Powerwave Technologies, Inc. (Nasdaq:PWAV) is another stock in this sector that has been stair stepping higher. It seems like PWAV clears an important level each month and then settles into a small consolidation. It has been repeating this action since late last year and is in the middle of another consolidation between $3.25 and $4.00 currently. Traders should monitor this latest base for an upside breakout. If PWAV falls under this base it could pull back to test the prior base near $2.75.




Bottom Line
The markets continue to make highs and this sector has been showing great strength. From a fundamental perspective, there is no shortage of possible catalysts for this group ranging from cloud computing to online communications and the continued growth of social media websites. While many of these stocks are likely too extended, they are the types of stocks traders should monitor on weakness as long as they continue to act this well. This is one of the rare cases where many factors appear to be perfectly aligned for continued support from institutions. Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

At the time of writing, Joey Fundora did not own shares in any of the companies mentioned in this article.

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