How Short-Term Action Comes Into Focus On Long-Term Charts
Have you wondered why your stock closed where it did? Why couldn’t it close
higher or lower? Why did it have to close there? Is there any valid reason for
that? You must be asking the same questions if you own Vitesse Semiconductor (VTSS).
The stock, with heavier-than-normal volume, broke out above its 50-day moving
average Wednesday but closed just below its pivot high set on April 20. Again,
why did it have to close there?
As you can see on its daily chart, VTSS broke out above a declining trendline on
April 11 and appears to be starting an uptrend. In fact, I can now draw a
short-term rising trendline. This morning, VTSS gapped on the open and looked
ready to take out the April 20 pivot high but failed. What could be the reason
for that? One obvious answer is that the stock has too much of overhead
supplies, but there is at least one more explanation. To solve this mystery, we
need to look at the weekly chart.
Do you see it? This could be one of the reasons. VTSS is bumping into its 38.2%
retracement level of the January high to the April low. Remember, if you are
asking “why,” it may be time to look at longer time frame charts.
Till Thursday,