Splunk Inc. (SPLK)

Splunk stock forecast: buy or sell

Splunk stock outlook

  • After hitting new highs last Friday, Splunk closed at $199.78 slightly moving a 0.9%
  • The stock is configuring an uptrend pattern since mid-March, when it bottomed at $93.92. This uptrend marked a 112.71% gain
  • Splunk Inc. develops and markets software solutions that enable organizations to gain real-time operational intelligence in the United States and internationally.
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Please read:
The thoughts expressed in this post are personal and should not be followed as recommendations for you to buy or sell shares. The author of this paper does not have any knowledge of the particular conditions of the reader, his or her finances or what is in his or her best interest at any given time. All users should speak with their financial advisor before buying or selling any securities Viewpoints are provided for informational motives only

Splunk stock chart overview

Should I buy Splunk stock?

All successful traders recommend adhering to a trading strategy and not make decisions based on subjective opinions, rumors or feelings. Trading strategies are meant for helping you in the decision process of what stocks to pick and when is the best moment to buy them. At Stocks2.com, we like to use very simple but trusted and powerful trend following trading strategies. Simple things usually work the best

Is SPLK stock a buy?

In the current situation of Splunk there is not any eligible buy setup. This doesn't mean SPLK will slide in coming sessions, or it will not rise higher. Simply, it doesn't match our recommended trading systems

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Should I sell Splunk stock?

Knowing when to sell a stock is even more difficult than knowing when to buy it. Trading strategies give us the ability us to avoid rash decisions based on our sentiments or the noise that surrounds the market. When selling, as well as buying, detailed setups are very easy to follow but are only valid for selling stocks in your porfolio, not for shorting SPLK stock

A guiding principle is that you must never mantain a trade that produces greater losses than those expected at the time of purchase. The timing to sell your stock must always be dictated by the stop-loss (automatic or manual)

Is it time to sell Splunk stock?

In the current situation of Splunk there is not any eligible sell setup, so Splunk stock holders with operations in green can keep their positions

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Analysts' recommendations to buy or sell Splunk stock

Brokerage firms and financial institutions post stock ratings based on their views of the market and the fundamental and technical situation of the analyzed stock. Unfortunately, the accuracy of these predictions is not very high, and certainly not a direct buy or sell signal

In the last month, 4 ratings were published for Splunk. General sentiment is bullish, with 3 out of 4 publishing positive outlooks

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Splunk ratings

Brokerage firmRating
Jun 22nd, 2020
Wells Fargo & Co Buy
Jun 24th, 2020
Bank of America Strong buy
Jun 25th, 2020
Berenberg Bank Strong buy
Jun 29th, 2020
Goldman Sachs Group Neutral

Technical analysis

Splunk stock started an uptrend in mid-March, and gained an amazing 112.71%. The price action shows higher tops and bottoms, and along the way provided very few buying opportunities for those who wanted to invest. Latest pullback was in mid-June, when price bounced at $171.28. Currently, the price swings in a consolidation between its last top ($213.26) and its last bottom ($171.28)

SPLK at new All-time Highs

Last Friday, Splunk reached new all-time highs (ATH) again at $213.26. Stock rallied fast in the last 2 weeks, cracking new all-time highs 4 times

SMAs overview

Moving averages are simple tools for investors to detect market momentum. A moving average is calculated as the simple mean of the previous N periods (usually sessions). Usual time periods used for moving averages are 21 days, 50 days, 100 days and 200 days

Supports and resistances

Traders use supports and resistances to spot price points on a chart that tend to act as obstacles, preventing the price of an asset to move in certain direction. Supports are levels where the price may find support as it falls. Price is more likely to "bounce off" this level rather than break through it. Nevertheless, if the price breaks down the support, it is likely to continue falling until approaching another support level. On the contrary, a resistance level is where the price may find a curb as it moves up. In the same way, the price is more liable to "bounce off" at this level, and if it finally breaches this level, it will rally more easily until it approaches the next resistance

The current resistances are:

  • R1: $213.26 (6.75% above)
  • The current support levels are:

  • S1: $192.75 (-3.52% below)
  • S2: $176.31 (-11.75% below)
  • S3: $171.28 (-14.27% below)
  • Bollinger bands

    The so-called Bollinger bands are a widespread practice designed by John Bollinger. It consists of 3 lines that are outlined superimposed on the price evolution chart:

    • The central band is a moving average, usually a simple moving average calculated with 20 periods
    • The upper band is calculated by adding to the value of the simple moving average 2 times the standard deviation of the moving average
    • The lower band is calculated by subtracting from the simple moving average 2 times the standard deviation of the moving average

    Since the price surpassed the upper band last Friday, the price sliced by 6.32%

    Relative strength index

    The Relative Strength Index is an oscillator-type indicator that track price fluctuations to identify when the price of a share or financial asset is overbought or oversold. Like other oscillation indicators, the RSI moves between 0 and 100. The relative strength indicator is one of the best known and most widely used indicators, and it was invented by J. Welles Wilder in the late 1970s

    The RSI dropped below the overbought level of 70 yesterday after just crossing to the overbough zone for 1 day (weak signal). The RSI reading today was 56.99

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    Earnings and financials

    Splunk Inc. (SPLK) came out with quarterly earnings of $-0.56 per share, meeting the analysts consensus estimate of $-0.57 per share. The company said turnover was $434.1 million aligned with analysts' forecasts as well.

    Same quarter one year ago, reported EPS was $0.02, so recently posted EPS is a drop of -2900%. Looking at revenues, figures barely changed compared to $424.9M same quarter a year ago.

    Splunk releases earnings report on mid next August. Wall Street analysts forecast an EPS of $-0.33, that is a 41.07% higher than Q2. If you hold or you are planning to buy Splunk stock, you must be vigilant as financial reporting day usually has a higher than usual volatility, and price can jump up or down with exceptionally low liquidity and not honouring your buy or stop-loss orders. Check company's website to confirm time and details on the earnings call and the earnings report.

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