Rubicon Technology, Inc. (NASDAQ: RBCN)

Rubicon Technology, Inc. develops, manufactures, and sells monocrystalline sapphire and other crystalline products for light-emitting diodes (LED), radio frequency integrated circuits (RFICs), blue laser diodes, optoelectronics, and other optical applications. The company fabricates its products from the boules and sells them in various categories, including core, as-cut, as-ground, and polished forms in two, three, four, six, and eight inch diameter wafers. It manufactures sapphire substrates and optical windows, including two inch to four inch sapphire cores and wafers for use in LEDs and blue laser diodes for solid state lighting and electronic applications; six-inch polished sapphire wafers that are used in the LED applications and in silicon-on-sapphire RFICs; and eight inch wafers for research and development efforts, as well as sells sapphire products used for windows and lenses in military, aerospace, sensor, and other applications. The company also offers optically-polished windows and ground window blanks of sapphire and various fluoride compounds, such as calcium, barium, and magnesium fluoride.

Before discussing potential trading opportunities, please take a look at the 1-year chart of RBCN (Rubicon Technology, Inc.) below with my added notations:

1-year chart of RBCN (Rubicon Technology, Inc.)

During the last 2-3 months RBCN had found support at the $6 level (red) and resistance near $7 (navy). The stock had already broken lower once in November and has now broke lower again last week. The breakdown occurred on very high volume, which should add validity to the move.

The Tale of the Tape: RBCN has broken its support at $6 and the stock should be moving lower. A short position could be entered on any rallies back up near $6 with a stop placed above that level. A break back above $6 would negate the forecast for a move lower.

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