Ancestry.com Inc. is an online family history resource, with approximately 1.7
million paying subscribers worldwide as of December 31, 2011. The company’s
subscribers use its Web-based services and content collection to research their
family histories, build their family trees, collaborate with other subscribers, upload
their own records and publish and share their stories. Registered users have
uploaded over 95 million pieces of content, such as photographs and scanned
documents. It derives revenue primarily from providing online access to digitized
historical records on a subscription basis. During the year ended December 31,
2011, the company introduced Fold3.com, as its Website specializing in military
records; released mobile apps for both the iOS and Android-based platforms and it
had approximately 1.8 million downloads, and developed technology to synchronize
family trees between platforms, including online, mobile devices and Family Tree
Maker desktop software.
To analyze Ancestry’s stock for potential trading opportunities, please take a look at
the 1-year chart of ACOM (Ancestry.com, Inc.) below with my added notations:
Over the last (9) months, ACOM has formed a strong support level at $21 (red).
Starting in September of 2011, ACOM has tested that $21 level on (4) different
occasions. In addition, ACOM has created an important level at $25, both as support
(green) in May and a resistance (navy) several times since last October. The stock is
currently pulling back to the $21 support.
The Tale of the Tape: ACOM is currently trading between its $21 and $25 price
levels. A long position could be entered on a pullback to $21 or on a break above $25
with a stop placed below the level of entry. However, if you are bearish on the stock
or overall market, a short trade could be made on a break below the $21 level.
Before making any trading decision, decide which side of the trade you believe gives
you the highest probability of success. Do you prefer the short side of the market,
long side, or do you want to be in the market at all? If you haven’t thought about
it, review the overall indices themselves. For example, take a look at the S&P 500.
Is it trending higher or lower? Has it recently broken through a key resistance or
support level? Making these decisions ahead of time will help you decide which side
of the trade you believe gives you the best opportunities.
No matter what your strategy or when you decide to enter, always remember to
use protective stops and you’ll be around for the next trade. Capital preservation is
Christian Tharp, CMT
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