Linear Technology Corporation (NASDAQ: LLTC)

Linear Technology Corporation designs, manufactures, and markets a line of analog integrated circuits (ICs) worldwide. It produces power management, data conversion, signal conditioning, radio frequency (RF), and interface ICs; µModule subsystems; and wireless sensor network products. The company’s products primarily include amplifiers, high speed amplifiers, voltage regulators and references, interface, data converters, battery stack monitors, silicon oscillators and Timer Blox, phase locked loop synthesizers and clock distribution, SmartMesh wireless sensor network systems, isolated µModule transceivers, RF circuits, power over Ethernet controllers, µModule power products, and signal chain µModule products. The company markets its products primarily through direct sales staff and electronics distributors.

Take a look at the 1-year chart of Linear (Nasdaq: LLTC) below with my added notations:

1-year chart of Linear (Nasdaq: LLTC)

LLTC had steadily declined from its $51 high in April clear down to $38 in October. Over a strong rally, the stock has created an obvious resistance at $47 (blue) over the last 2 months. A break above through $47 should mean higher prices for the stock.

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The Tale of the Tape: LLTC has a key level of resistance at $47. A long trade could be entered on a break through that level. However, if you are bearish on the stock, a short trade could be made on any rallies up to $47.

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

Follow me on Twitter: @cmtstockcoach