Most of the price levels highlighted in Today’s Big Stock are of the horizontal variety. They’re easy to identify and easy to trade off of. However, from time to time I also like to discuss important levels that are somewhat of a “moving target” in the form of up or down trendlines. One such stock forming an up trendline is that of Volterra Semiconductor Corporation.
Volterra Semiconductor Corporation designs, develops and markets analog and mixed-signal power management semiconductors for the computing, storage, networking, and consumer markets. The company’s products are integrated voltage regulator semiconductors, integrated power protection and distribution semiconductors, and scalable voltage regulator semiconductor chipsets that transform, regulate, deliver and monitor the power consumed by digital semiconductors. Through its power system architecture and mixed-signal design techniques, it has integrated power, analog and digital circuits onto a single complementary metal oxide silicon semiconductor. The company sells its products primarily to original equipment manufacturers; original design manufacturers, contract equipment manufacturers, and merchant power supply manufacturers, directly through its internal sales force and indirectly through distributors and outsourced suppliers.
To review Volterra’s stock, please take a look at the 1-year chart of VLTR (Volterra Semiconductor Corporation) below with my added notations:
After bottoming at $18 in October of last year, VLTR has been in a steady up trend ever since. Along the way, VLTR has formed a nice trend line of support (navy). Always remember that any (2) points can start a trend line, but it’s the 3rd test and beyond that confirm its importance. Obviously VLTR’s trend line is very important to the stock since it has been tested on multiple occasions. In addition, VLTR seems to have created a key short-term level at $32 (green).
The Tale of the Tape: VLTR has created a nice trend line of support over the last (6) months. A long position could be entered on a pullback to the trend line support, which is approaching the $32 support, with a stop placed under the entry. A short position could also be entered if VLTR were to break the trend line of support/$32 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!
Christian Tharp, CMT