Let's notice that during the August corrective period, Qualcomm (Nasdaq: QCOM) has carved out a contractionary, coil-type consolidation pattern in the aftermath and atop its prior explosive upmove from the July low at 31.51 to the Aug high at 40. At its deepest corrective price of 37.45 at the 8/16 low, QCOM had retraced only 30% of the entire prior upleg.

As of this moment, QCOM is trading above 80% of all of its action since the July low, which is a very impressive feat, and a bullish sign. The overall picture is very constructive for upside continuation from the coil, which projects to 42.00/50.

Of course, the question for me during these extremely volatile times is whether or not I can expect a stop 2% beneath my entry price to survive the intraday noise that continues to clutter every trading hour lately? Maybe not, but purely from a technical perspective, let's notice that today's first-hour whipsaw spike from 38.80 to 38.00 back up to 38.80 appears to me to have put in a third important spike low since mid-Aug.

That tells me that if today's low at 37.98 is taken out, I should not stick around to find out just how much more weakness will be forthcoming. I should bail out, see what happens in the hour(s) immediately thereafter, and if another Bear Trap emerges, determine the wisdom of reentering long positions.

It is with the foregoing in mind -- a bullish Jul-Aug pattern, followed by a tightly defined consolidation -- that tells me to be vigilant about protecting the position just beneath 38.00, intraday noise or not.

By Mike Paulenoff

Mike Paulenoff is author of MPTrader.com (www.mptrader.com), a real-time diary of his technical analysis and trading alerts on ETFs covering metals, energy, equity indices, currencies, Treasuries, and s

Mike Paulenoff Archive

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.