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Wednesday, June 13, 2007
Stock of the Day

Akamai (NASDAQ:AKAM) is a great growth company, that often trades at a premium multiple. The stock suffered a tumble after reporting earnings in April. It wasn't that the earnings were bad, but that investors had lofty expectations, and punished the stock unfairly when they didn't raise guidance more.

The stock has been undergoing a correction over the last couple of months, but the recent action leads me to believe that the correction is almost over, and the stock is ready to resume its uptrend.

AKAM chart

A look at the chart shows that last week, the stock vaulted out of its recent consolidation range on a big spike in volume. The next day, the stock added to its gains on another big volume day. Since then it has been trading sideways, despite the big down day in the market.

I think the stock is ready to overtake its 50-day average resistance that lies just ahead. Over time, I expect the stock to go on to make new highs again before the end of the year.

As for the rest of the market, it also added to its gains throughout the day on Wednesday. The market is still oversold, so I think this bounce should last a bit longer.

Disclosure: The author is long AKAM.

Source: Akamai Is Poised to Resume Its Uptrend