Friday, November 11, 2011 10:10:13 AM
Broadcom -
>>> Broadcom (BRCM) is showing a similar setup right now -- albeit a more defined one. Broadcom has been consolidating in a sideways channel since the start of the summer, locked between support at $31 and resistance at $38. It’s a perfect example of an “if/then trade.”
Put simply, an if/then trade is a contingent setup whose direction is dictated by the price action of Broadcom’s shares; we’re looking for a breakout outside of the channel to take a trade. In other words, if shares of Broadcom break above resistance, then buy. If shares fall below $12 support, then this stock becomes a short candidate.
Although Broadcom’s channel does have a particularly wide range, the size of the range is actually a good thing for traders. That’s because it provides a best guess for the extent of the move in Broadcom -- a wider channel generally yields a bigger move as a result of the breakout. While it may be tempting to enter this name early in anticipation of an exit form the channel, the only high probability trade comes in reaction to the breakout.
Broadcom shows up on a list of semiconductor stocks liked by hedge funds in the second quarter. <<<
>>> Broadcom (BRCM) is showing a similar setup right now -- albeit a more defined one. Broadcom has been consolidating in a sideways channel since the start of the summer, locked between support at $31 and resistance at $38. It’s a perfect example of an “if/then trade.”
Put simply, an if/then trade is a contingent setup whose direction is dictated by the price action of Broadcom’s shares; we’re looking for a breakout outside of the channel to take a trade. In other words, if shares of Broadcom break above resistance, then buy. If shares fall below $12 support, then this stock becomes a short candidate.
Although Broadcom’s channel does have a particularly wide range, the size of the range is actually a good thing for traders. That’s because it provides a best guess for the extent of the move in Broadcom -- a wider channel generally yields a bigger move as a result of the breakout. While it may be tempting to enter this name early in anticipation of an exit form the channel, the only high probability trade comes in reaction to the breakout.
Broadcom shows up on a list of semiconductor stocks liked by hedge funds in the second quarter. <<<
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