Here’s your trade on Broadcom ($AVGO) – November 10, 2023
This is Dan Fitzpatrick with FITZ IN FIVE. Broadcom ( NASDAQ: AVGO ) has broken out, this is a daily chart.
Now, if you look at the entire semiconductor space ( NASDAQ: SMH ), the chart looks pretty similar. If you look here you can see that this ( NASDAQ: SMH ) is kind of cup and handle-ish. it’s a pretty deep “V” here, but the dynamics are still the same. And that is a rally back up to this prior high, which was quite a while ago.
It’s not as relevant as it would be if it was 3 months ago or something, but it did get back there. And then we are coming down here on, I would say, unremarkable volume. We got a couple of big spikes here, but then after that, we are getting a breakout to the upside. All in all, the semiconductor space ( NASDAQ: SMH ) looks pretty darn good. I think this is going to go to new highs, it might be on Monday. This is a really, really strong sector right now ( INDEXNASDAQ: SOX ), and that is what we need.
The market doesn’t go high, it does not continue to go without tech, that’s just the way it is. When you’ve got another 10-11 percent to go in the SOX ( INDEXNASDAQ: SOX ) before it hits a new high, that’s doable, that is absolutely doable. And so that leads me to Broadcom ( NASDAQ: AVGO ). This is a weekly chart here; this had broken out back here, a nice move if you caught it. I did not, but it had a really nice move here, almost 40 percent higher, and then it’s been drifting for a while. Now, it is just starting to move again.
In my mind, this is a key signal, this is a “get it while it’s hot” signal. You can look at the daily chart and you will see it’s got kind of a wide range. But irrespective of that wide range, I’m doing this on Friday night and we had such a big volume spike today that you have to conclude that this is institutional buying. Simply put, demand for the stock at 920.00 far exceeded the supply for the stock. So buyers got a buy, and so they are pushing this stock higher.
My suggestion is, that you go ahead and take a long position in this. But do not let it fall below the 50-day moving average before you get out because we may be wrong on this. What I would suggest doing to keep an even tighter stop on it is, just keep it a little bit below 900.00. Because you have to figure, if the stock falls back below 900.00, well then couldn’t we just conclude that this breakout was kind of a fakeout and it has more work to do?
You don’t need to sit there and wait for the stock to go down here before saying, “Hey, golly gee, maybe I am wrong about this.” You want to always be setting your stops at that, Oh crap, I’m wrong level, that’s where they should be, and the highest level possible in this situation.
Of course, before you can do that, back up one step and say, “Alright, what has to happen to the stock before I think that I’m wrong?” And before you can do that, you have to say, “Why the hell am I buying this thing? Why right here, right now?” And when you answer that question, then you can back into finding out where you set your stops.
So it all starts with, why am I buying it right now? And then, what has to happen for me to say, “Do you know what, I was wrong to buy it there.” Bam!, that’s where your stop goes. This stuff is not that hard. Trading is actually pretty simple, it really is. Do you know what is really hard? Doing what you know you are supposed to do. When you can master that, you’re a master trader.
Again, the actual trading part of it, figuring out what you should do, it takes some work, it takes some years, it takes a lot of experience, you have to know how stocks move. And that is something that you are not going to get in a series of free videos like this. You are not going to get it by reading a couple of books. You are only going to get that experience by just getting out there and doing it.
What you are going to find over time is, and I mean this, what you are going to find over time is, that the things you need to do, the things you need to know to trade well, there are not a large number of things. It is not that complicated. But what is complicated is all the exceptions. All of the, Oh this time is different situations. Those are the things that you have to master. And if you can handle all of that stuff, you’re on your way.
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