Mid-cap software firm Aspen Technology (AZPN - Get Report) is forming a channel of its own, with a twist. Instead of consolidating sideways like Symantec, Aspen has been bouncing higher in an uptrending channel. That uptrend gives traders a high-probability range for shares to move through.
Aspen's trend channel has been intact since the beginning of the summer, as shares pinballed in between the glut of demand for shares at trendline support and the glut of supply at resistance. The fact that support has stopped the decline in shares the last five times it's been tested bodes well for the strength of that line going forward. Any stock in an uptrending channel presents a buying opportunity, but for risk-averse investors, the best time to buy comes after a bounce off of support.
That bounce is important because all support levels do eventually fail, and when they do, you don't want to be left holding the bag -- it shows that AZPN can still catch a bid at support before you buy. If you decide to be a buyer, I'd recommend keeping a protective stop just below the 50-day moving average.