Thursday, February 15, 2007

Trade of the Day - QUALCOMM, Inc. (Public, NASDAQ:QCOM)

QCOM was upgraded from neutral to buy at Oppenheimer. That is a compelling upgrade and there was sufficient interest in the stock in pre-market for me to look at the daily chart for potential target areas as mapped out above. I also liked the fact that QCOM had been basing for many months tagging $40.00 several times along the way. The only caveat I had regarding this trade was yesterday's WRB and Friday's OPEX. But give me a compelling, low risk breakout play and I'm willing to take a chance.

The first chart below is the consolidation breakout trade which I executed minutes after the open on the 1 minute timeframe. My initial target was $40.00 and I was willing to stay in the trade as long as the 10 period EMA was not breached on a closing basis. QCOM broke out and rallied about $0.30 before coming back in for the obligatory retest. After that it moved slowly along the MA until it got its second wind. The second rally was small tight candles which are preferable and easier to manage than the wide sticks. It consolidated a bit at $40.00 resistance but kept going. I stayed in the trade into the next consolidation where I tightened my stop and was taken out.


The second trade was dummy entry executed off of a NRB on the 15 minute chart after price tagged the 10 period MA. I exited the trade as price tagged the second target $41.38.



6 comments:

Trader-X said...

Nice trade.

Jamie said...

Thanks X,

Trading from home this week so I can trade the breakouts more aggressively.

Anonymous said...

Hi Jamie,
What do you mean by OPEX? Thks

Pat

Jamie said...

Hi Pat,

OPEX is options expiration. The second last Friday of each month is options expiration. Closing prices of stocks with listed options cluster at option strike prices so there is little price movement and it is difficult to daytrade. This usually starts to happen Thursday afternoon prior to OPEX Friday. Tomorrow will likely be NR for the markets as well as stocks.

Flatwallet said...

Jamie,

I been meaning to ask you. IS the 10 MA and eMA or sMA. Have a good weekend.

LP

Jamie said...

Hi LP,

I use the EMA for the 5, 10, and 20. I use the SMA for the 50 and 200.

I prefer the 5 EMA on the 15 and 30 minute timeframes in the early morning session, but around noon, I remove the 5 and use the 10 EMA for the afternoon session. The reason I do this is because the 10 EMA usually serves as support on the slower price action during the midday doldrums, whereas price has a tendancy to run through the 5 EMA on a pullback. Also, on lower timeframes 5 and 1 minute charts for example, I do not use the 5 EMA as it runs through most of the candlesticks.

Hope this is helpful.