Watching QCOM Once Again

Stock QCOM

QCOM Daily Chart

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.