360 Degrees of Akamai

Editor's Note: TheStreet.com has always believed that offering a wide variety of opinions and viewpoints -- rather than a monolithic "house view" -- helps readers make better investment decisions. In that spirit, we bring you "360 Degrees."

This weekly feature is designed to take advantage of our stable of reporters and contributors, who will offer analysis of specific stocks from all angles -- fundamental vs. technical, short-term trader vs. long-term investor.

Today's subject, Akamai Technologies (AKAM Quote), was chosen by our readers last week; please see our poll below to help determine the next stock to get the "360 Degrees" treatment.

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Akamai Has Room to Run, by Alan Farley

Akamai Technologies is sitting in a sweet spot. The stock broke out above key resistance at $18 last November and has been moving higher in a steady uptrend.

Although it has nearly doubled in price over the last five months, the technicals suggest the rally has considerable room to run. In fact, the current pattern shows little overhead resistance until the rally approaches $40. That level would mark a good place for traders and investors to start taking profits.

Avoid the Pain if the Bubble Bursts, by Richard Suttmeier

Akamai Technologies is rated a sell by ValuEngine and is trading 107.1% over its fair value of $15.72. The weekly chart profile is overbought, with the five-week modified moving average at $28.67. My model shows a monthly value level of $27.66, which is where I would expect buyers to emerge if the stock fell into a downtrend. My model currently has no pivots and risky levels for Akamai.

When a stock is both overvalued and overbought without a risky level, it is moving higher on pure momentum in a chart pattern I refer to as parabolic. With a stock that's gone parabolic, investors should avoid adding to positions, stay with their current position and raise a protective stop each week. I favor a sell stop on a weekly close below the five-week MMA, and I would raise the stop as this MMA moves higher. Protect gains, and avoid the pain when the stock's bubble bursts.

On Dec. 12 and Jan. 12, I projected that Akamai had risky areas at $23.86 and $24.74. Investors who reduced holdings at these levels booked some nice gains, but obviously my model did not anticipate the parabolic that evolved once these levels were taken out. However, my model has proved correct on about 75% of the stocks in the software industry. ...