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Cloud Stocks Could Face Some Thunderstorms

|Includes: FFIV, NFLX, Rackspace Hosting, Inc. (RAX), RVBD

 Cloud computing has really been one of the strongest sectors over the past year. Many of the leading cloud computing stocks have surged higher over the past year and still look very attractive. The short term problem with many of these leading names is that some of these stocks are overbought and need to pullback.

Rackspace Hosting Inc.(NYSE:RAX) is a leading cloud computing company that has surged higher since June 20, 2011 when the stock traded at $38.00 a share. This morning, RAX stock is trading lower by 0.10 to $44.40 a share. This stock is now very extended and overbought on the daily chart. RAX stock continues to be a leading name, however, at this point the stock is poised to pullback soon. Short term traders can look for intra-day resistance around the $45.00 area. Should RAX stock decline during the trading session, traders should watch the $43.80 level for short term intra-day support.

Riverbed Technology Inc.(NASDAQ:RVBD) is another leading networking and cloud computing stock. This morning, RVBD stock is trading lower by 0.29 cents to $39.45 a share. This stock is very extended and overbought on the daily chart at this time. The stock may need to pullback a bit before making another move to the upside. Short term traders should watch for intra-day support around the $39.00 area.

Other leading cloud computing stocks that are slightly extended on the daily charts include Netflix Inc.(NASDAQ:NFLX), and F5 Networks Inc.(NASDAQ:FFIV). These stocks are all currently very strong on the charts, however, they are short term overbought and extended. This tells us that they will usually need to pullback a little before the institutional money will push them higher again. After a small pullback these stocks should be free to soar into the clouds.

Nicholas Santiago