Wave Systems is Almost Where it Needs to Be (WAVX)

Looking for a quick trade? Don't put Wave Systems Corp. (NASDAQ:WAVX) in your portfolio just yet, but do put WAVX on your watchlist. It's on the verge of becoming a breakout monster.

For those not familiar with it (which is likely most people), Wave Systems is an IT-security company. It's become something of a hot button for investors of late, with hackers stealing bitcoins, with Target losing credit card data for tens of thousands of customers, and even with First Lady Michelle Obama's credit card information being nabbed by digital thieves. If there was ever a need and opportunity for the services of a company like WAVX, this is it.

There's a specific catalyst waiting for Wave Systems Corp. to tap this year, however, that could really set WAVX off. It's called TPM, which is an acronym for Trusted Platform Module. In simplest terms, TPM security offers a holistic approach to securing entire digital ecosystems rather than just one aspect of the way a smartphone or laptop connects to the internet. It's not exactly a new idea, but it's relatively new to users who need higher-level solutions. The market is quickly coming around, however. A week and a half ago, Wave Systems shopped its first software with the necessary TPM security chips to make the software work with the platforms it's installed on.

It's not the reason one would want to step into a WAVX position in the foreseeable future, however.... at least not directly. No, the reason a trader might want to be willing to take a shot soon has to do with the shape of the Wave Systems Corp. chart.

The daily chart of WAVX below speaks for itself. The stock's fought its way above most of its key moving average lines over the past few days, and rehurdled the 100-day moving average line (gray) again today. The move puts the finishing touches on the best bullish effort we've seen from Wave Systems in many, many months.

It's not quite ready for prime-time just yet, however. There are a couple of things the stock needs to do - lines it needs to cross - before WAVX is trade-worthy. The first of those lines is the ceiling around $1.15. The second is a cross above 200-day moving average line (green) at $1.24. If Wave Systems Corp. can move above that key line, that should seal the deal on the budding uptrend. In the meantime, it's earned a spot on your watchlist.

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