Qualcomm (QCOM) — today’s selloff is tomorrow’s opportunity. (November 06, 2014)
I want to look at Qualcomm ( NASDAQ:QCOM ) today. They reported earnings that were less than robust. This is a dragonfly doji and it’s on the heels of a really massive gap here, a big gap down. What this reveals, it’s go a really long quote “tail”, that’s the difference between either the open and the close, which should be very tight together here, which they are, and the bottom of the range. What this reflects is an intraday reversal here, and that’s what we’ve got.
Let’s look at this intraday; you can see that just close to 3:00, a little bit before this, the stock, which had been in a volatility squeeze all day long, started to move higher and move higher on volume. So one thing that I want you to consider doing, and I’ve talked to members about this before, you see this volatility squeeze of stocks that have made big moves typically one way or another.
This is what you want to see, a stock that has made a big move, and then you set a price alert slightly above the upper Bollinger Band; then your attention is only taken back to that stock if the stock starts moving higher. If it doesn’t move higher then there’s really no reason to look at the stock, is there? So use this simple technique and it’s going to wind up helping you out, find some pretty good trades. This was not a huge move, 70.57 is where the stock closed, $68.00 essentially, so less than $3.00, right? But that amounts to something if you’re catching it right as the stock is breaking out from that intraday volatility squeeze.
Now what do you do going forward? Look, the top of the range here today was 71.07, so what you do is, and I’m using InteliChart, set a price alert at, we’ll call it, 70.99, that’s below the intraday high from today but just a little bit. I’m going to go ahead and set this for a week, the reason I have this a little bit lower is because I want to know if the stock is starting to move up so I can watch and then catch it earlier. But the way this thing looks right now it really looks like this was a massive puke fest here, big selling right at the close, and then the stock ultimately is being bought.
So I think this is a buying opportunity for you to get into Qualcomm ( NASDAQ:QCOM ). Now, the weekly chart shows that it’s actually been under distribution for a while, but you trade these sell-offs and you sell them into strength. This is a sell-off, now you look to sell it into strength several points higher.
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