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Per my newsletter mention I purchased OVTI today at 28.70. Stop loss is at 27.69 and objective is 33.83. I am risking $101 to pick up $513, per 100 shares. It is a 5-1 risk/reward ratio.
My stop loss at 28.40 got hit today. Nonetheless, I have not yet liquidated the positions as all my stops are mental.
Below is the message that I gave my message board regarding the trade:
I have decided to hold on to the positions I have left and risk the earnings report that comes out this afternoon after the close.
It is a risk, especially since the stock has broken below the minor support at 28.50 and well as giving a mini sell signal on the daily closing chart by closing below 28.98. Nonetheless, the previous high daily close, before this recent rally, was 28.03 and looking at the weekly chart back in 2006 when the stock was last trading up at these levels, the first time the stock got above $30 it fell back down to 27.92 and the following week to 28.51. As such, there is some weekly support here, if you look back at 2006.
The worst case scenario, in looking at the chart (not fundamentals), is a drop down to 26.12, and I am willing to accept that amount of risk. The reason why I am willing to accept that risk is that the possible upside objective is 34.13 and that means that even if the stock drops down to 26.12, with the stock presently trading at 28.25, I am risking $2 to pick up $6 and that is still a 3-1 risk/reward ratio, and that is considering the worst case scenario.
As such, I will hold on to the positions for the earnings report.
OVTI is not acting as it should be acting and it is starting to cause me some concern.
This is a stock that had a positive earnings report this week, is on a major uptrend, and shows only minor to decent resistance up at 31.30 from 2006. In addition, the stock is having a positive reversal week having gone below last week's low, and now traiding above last week's high.
This all points to a stock that should be leading the way up yesterday and today and yet the stock is actually trading in the red. Something just doesn't seem right and under the present conditions in the market, anything that is not as it should be, should be questioned.
I am considering taking profits today because if the stock does not rally above yesterday's high at 31.37 today, the gap area down at 29.05 will start to beckon.
I will give the stock another couple of hours to see what it can do, but I am starting to get itchy fingers. This stock should be "roaring" right now.
Here is a chart update.
With the positive earnings report yesterday, the stock is due to open higher today. Stock is bid at 30.00 and asked at 30.10 at 7:30am.
Last week's high was 30.32 and if the stock is able to get above that level today, or any day this week, it will show up as a reversal week as the stock already went below last week's low at 28.50 when it dropped yesterday to 28.07.
A rally above 30.32 will set up a bullish reversal that should take the stock at least up to the 30.98 to 31.30 level. If 31.30 is broken, the stock will likely test the all-time highs between 33.83 and 33.49. A rally above 31.30 should take the stock at least up to 33.46 (high made the first week of Feb06).
The stock is gapping up today above yesterday's high at 29.05. As such, the bulls are committed to taking out the 30.32 high, or the gap will become a magnet to be closed. If the 30.32 level is broken, you will likely see an additional round of new buying.
If the stock fails to take out the 30.32 high, drops down to 28.92 to 29.05 will likely be seen, but that level should be strong support today.
Here is my weekend comment to my subscribers regarding OVTI
OVTI once again generated a green weekly close keeping the uptrend intact. Nonetheless, the stock is starting to reach levels where some selling could be seen, with $30 being psychological resistance, and 30.98 to 31.19 being previous levels where selling was seen back 2006. The area between $30 and $31 is not considered to be strong resistance, but if the indexes start having problems it is likely the traders will use that area to start liquidating their profitable trades. The stock did close almost on the highs of the week, suggesting that further upside will be seen this week with 30.98 to 31.19 as the probable objectives. A break above those levels, though, will likely generate further buying with 34.13 to 34.39 as a likely objective. There is very little support on the chart, but the stock did have a mini correction on Tuesday, down to 28.50, and therefore that level now has to be considered pivotal short-term support. A break of that level would likely generate a drop down to 26.15. As such, I suggest the stop loss level be raised to 28.40.
thanks. The mkts. are responding to euro crises so monday is critical after ireland package is announced but ovti defied that on friday, however tues. after mkt close ovti has ER so it might run or pause prior to that,then it depends how it reports. hopefully the way aapl iphone and ipads are selling should be a blow out...
Interesting you assign any significance at all to price action from 4 years ago. 25.65 was the most recent breakout and has held after being tested. It's all about the CC Tuesday night and MAYBE psychological resistance around 35 if it isn't blown away in the possible earnings induced buying frenzy that good guidance could bring. Good luck ignoring fundamentals.