Just before Wednesday's opening bell, tech giant Palm (NASDAQ: PALM) announced that it raised the number of shares it will sell in a new public offering. The company will now offer 20 million shares rather than the previously reported 16 million. The offering will be at $16.25 per share and should lead to $313.1 million in proceeds.
In early trading, PALM was up more than 3% -- pushing the stock through the $16 level. This level had acted as resistance in the past, so this technical advance is important. We could see the $16 level act as support if needed. Further support could come from PALM's 10- and 20-week moving averages, both of which are advancing to catch up to the equity's current position. More support can be found in the form of PALM's 10- and 20-month moving averages.
This news and subsequent rally (assuming it continues through the trading session) could place PALM at an interesting entry point. The problem is that the stock has had a propensity for making a quick burst higher and then a pullback. That said, any pullback could be contained by any of the aforementioned trendlines and/or the $16 level. If you are looking for a crucial level for PALM, watch the $18 level. The last time the shares traded this high was at the end of 2007, when the stock retreated from resistance at the $18 level. If you are thinking about investing in the sultan of the smart phone, monitor the $18 level and the stock's battle with potential resistance.
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