Todays Big Stock: Freescale Semiconductor Holding (NYSE: FSL)

Freescale Semiconductor Holdings I, Ltd is an embedded processing semiconductors and solutions provider. Freescale’s product portfolio falls into three primary groupings: Microcontroller Solutions, Networking and Multimedia and Radio Frequency, Analog and Sensor. The company sells its products directly to original equipment manufacturers, distributors, original design manufacturers and contract manufacturers through its global direct sales force. Its embedded processor products include microcontrollers, single- and multi-core microprocessors, applications processors and digital signal processors. The Company also offers semiconductor products, including radio frequency, power management, analog, mixed-signal devices and sensors.

Please take a look at the 7-month chart of FSL (Freescale Semiconductor Holdings I, Ltd) below with my added notations:

Over the last 7 months, FSL has seemed to find support or resistance on or at the increments of $2. First, notice the $14 topside resistance (red), which was also previous support (green). Next, you can see the common $12 level (blue) and the bottom level of $10 (navy). The nice thing about FSL is that it shows you how to trade it no matter what direction the market moves. If you like the short side of the market, you could either short FSL on rallies up to a $2 level or on any breakdowns of them. If you want a long play instead, you could buy FSL on a pullback to a $2 level or on any breakout through one of those levels.

The Tale of the Tape: FSL finds the increments of $2 important, specifically $10, $12, and $14. If FSL breaks out above $14, you could enter a long position. However, if you are bearish on the market and FSL rallies back up to $14, you could enter a short play. You could also buy FSL if it comes down to $12, or short the stock if it breaks that $12 support. After that, watch the major $10 support!

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade.  Capital preservation is always key!

Good luck!
Christian Tharp, CMT