Don’t Jump The Gun
Index Check Up
It looks like many of the groups in the tech sector are rallying once again.
The problem with a rally after a sharp decline is that we need to wait to see
several consecutive days of volume-backed moves to determine whether or not it’s
going to last.Â
On days like Wednesday, I like to look at stocks pulling back from their
lows and find setups for shorts.
Today’s Watchlist:Â
(
ARBA |
Quote |
Chart |
News |
PowerRating),
(
ABSC |
Quote |
Chart |
News |
PowerRating),
(
LTCC |
Quote |
Chart |
News |
PowerRating),
(
CNXT |
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Chart |
News |
PowerRating)
Ariba
(
ARBA |
Quote |
Chart |
News |
PowerRating) has had a few ups and
downs lately, but in the bigger picture, it’s actually tracing out an
interesting pattern. After consolidating following the July gap, it began to
decline. As always, I could not be sure if the decline was the beginning of a
downtrend or simply a bullish flag. Wednesday’s price action shows a rally out
of the channel, signaling the potential formation of a bullish flag. Of course,
I won’t be certain until after the fact, so I’ll take what I have now
and work with it.Â
If you missed the first move out of the
channel, look for a close outside of the channel followed by a
continuation bar. Set your alerts above Wednesday’s intraday high and watch for
positive price action again tomorrow.
Aurora Biosciences
(
ABSC |
Quote |
Chart |
News |
PowerRating) is moving up along with the rest
of the biotech group. Although the stock is still well off its all-time highs,
we’ll still add it to the list as a potential breakout. The recent trend has
paused and traced out a cup pattern. Watch for a move above the top of the
pattern which I’ve highlighted on the chart. Another thing to note is that there
are three near-term trendlines supporting the recent gains. Watch for moves below
the trendlines to signal potential shift in sentiment. The first trendline is
the strongest, the second has been tested three times, and the third is the
50-day MA.
Lattice Semiconductor
(
LTCC |
Quote |
Chart |
News |
PowerRating) is bouncing off support after
retesting it for a fourth time. The high-volume move on Wednesday caught my
attention. Currently, I’m seeing a bounce on average volume. Set your alerts
near support and watch for a breakdown to provide a short opportunity. If you do
open a position, watch for more support near the May low.
Conexant
(
CNXT |
Quote |
Chart |
News |
PowerRating), which I added to the Shortlist earlier
this week, is bumping its head on resistance, suggesting that Wednesday’s rally
may simply be a pullback from the recent low. Watch for a break below support,
near 30, for a potential short. Since there are no other near-term support
levels, you’ll want to watch for a possible three-day move lower. As always,
watch for a volume-backed breadown.
Until later,Â
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