Is a 10% Pullback An Opportunity to Buy This Computer Hardware Stock?

We keep a Strong Earnings ChartList (SECL) for a reason.

It organizes a list of companies showing strong fundamentals (better-than-expected revenues and EPS) and strong technicals. One issue, however, is that many of these stocks move higher, because of these strong reports, and then it's up to us to show the patience and discipline necessary to take advantage of short-term pullbacks. Chasing stocks after big moves can be extremely costly, so we try our best to resist that temptation. One stock that fits this scenario, in my opinion, is Western Digital Corp (WDC). It had a big two-week run in late February to early March as you can see below:

Enter Western Digital Corp. (WDC):

Technically, WDC looks quite strong. Its AD line is setting new highs in March as price reaches new 52-week highs. WDC is also one of the best-performing computer hardware stocks ($DJUSCR). Apple, Inc. (AAPL) has weighed heavily on the group since topping back in mid December. And while WDC has ignored the issues apparent with AAPL and other computer hardware stocks, WDC is certainly not a picture perfect stock. The above 1-year chart shows a stock that has consistently been trending higher, but that has not been the case long-term. If you look at WDC's long-term 20-year monthly chart, it'll quickly become apparent that WDC set a high at the beginning of 2015 and it hasn't been able to clear it for the past 9 years. This comes during a period where the benchmark S&P 500 has risen from 2000 to more than 5000. So.....watch the key support levels on WDC identified on its chart. If these short-term support levels do not hold, keep the not-so-great long-term chart in mind.

Happy Trading! Tom Bowley Chief Market Strategist EarningsBeats.com Better Timing. Better Trades.