(NYSE:RAX) stock has had a rough year, down over 50% YTD, as margins have been hurt due to investments in items such as solid state drives and other technology, as well as by competition from Amazon
(NASDAQ:MSFT), and Google
(NASDAQ:GOOG). This is reflected in the two-year-high short interest of 18 million shares, or 16.25%, of the float.
Rackspace is hoping that OpenStack momentum will improve while the investments pay off. This may be a bounce candidate into next year; however, I would suggest incorporating a strong technical discipline on the long side.
As illustrated in the weekly chart below, Rackspace shares failed and turned down from their 50-week moving average (purple arrows and line). Shares are now approaching a major support band (green lines), near $33 to $20. Volume remains heavy, thus it is key that shares hold above this area, otherwise, the next stop would be in the mid $20s.
RAX Weekly Chart
Click to enlarge
(See also: What Mobile Sensors Mean to Tech's Future: A Q&A With Rob Scoble of Rackspace)
No positions in stocks mentioned.