QCOM (still fresh in my mind from some nice profits in February) caught my eye after Friday’s trading session for having unusually high volume and what looks to be a potential bullish reversal signal. The stock transacted over 34 million shares versus a 10 day average of 14.4 million shares. Also worth noting the monster intraday reversal with the stock having a significant gap down opening at 51.80 (Thursday’s closing price was 53.21) and a brief selloff down to a low 51.05 which occurred about 10 minutes into the trading session. From that point, the stock began to climb higher for the remainder of the session and close at 53.74. [The volatility for QCOM in Friday’s session seemed to be caused by news which broke premarket regarding the company revising down on its forecast due to a lack of licensing revenue related to an ongoing legal battle with Apple.] If QCOM continues higher on Monday and breaks above Friday’s high of 53.95, I would be interested in opening a long position around 54.10. From there, looking for the stock to make a run towards 58.67 which was the high from 1/23 and also where the stock found resistance in mid March. On a pullback below 53 I would look to add more shares of QCOM as the area around 52.70 has provided support on a number of occasions in January, February, and April. Friday’s low of 51.05 would be the stop area, which also represents the low of 2017. Based on these levels I am looking to position size based on two possible scenarios: 1) If I buy only on the initial breakout I am risking about 1% (portfolio) to make about 1.5% and 2) If I buy the initial breakout plus the pullback I am risking about 1.5% to make 3% and thus achieving my goal of a 2/1 reward/risk ratio.
This trade could potentially catch the next QCOM dividend as it goes ex div (0.57) on 5/26. Earnings out of the way until 7/19.