Ambarella (AMBA) is flying like a drone. But it’s looking like a potential climax high to me. (June 13, 2015)
I want to look at Ambarella ( NASDAQ:AMBA ). This is “The Little Engine That Could”, the little engine that can. The stock popped out of this volatility squeeze and continues to move higher. But here’s the deal: this is a pretty short video because the analysis is actually pretty simple. If you’re long this stock you need to be protecting this with a pretty tight stop. One thing you can do, I’m just changing the middle Bollinger Band to 10; that would actually be a pretty reasonable number, even 8.
I would say if the stock starts falling below this 8-period moving average, you could snug it up even more if you want and use an 8-day exponential moving average, but this actually should work okay. Since the breakout this stock has not come back to the 8-period moving average. So if it does then that gives you a change in character of the stock, right?
My sense is that, and I’m not long this stock I actually sold my position last week and of course I sold too soon because the stock is up at a high. I don’t think I’m a sold out bull, I think I’m just a bull who knows that the stock is getting really, really close to this climax high. Even “Investor’s Business Daily” mentioned that over the weekend. So after this consolidation, that’s the strongest thing that a stock can do; an uptrending stock, the strongest thing that it can do is to continue to move higher and continue to move on increasing volume, higher and higher volume.
But if you look at what happened on Friday; very strong volume, really strong volume, but not as high as this move. And so when I look at the weekly chart I see a stock that I want to own but I do not see a stock that I want to buy, not right now. As I’ve said, this thing is flying like a drone. It’s moving up but I think, at this point, you’ve got to just manage your risk by tightening your stops. If you’re buying you want to wait for a better opportunity, and that’s all she wrote.
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