For the past year & a half, going long SMTC (Semtech Corp) while at the bottom of this trading range (bottom white line) and/or when the stock became oversold (RSI 30 or less) has proved to be a timely entry for a long-side bounce trade. A long here with a stop slightly below the bottom of the range targeting the mid-point of the range (orange line) or possibly even the top of the range may or may not work out but certainly looks like an objective entry.
SMTC daily May 28th
Personally, I’m going to pass on this one, at least at this time for a couple of reasons. First, I’m keeping things light for now & trying to be a little more selective on establishing new positions until I get a better feel on the near-term direction of the market. Second, I suspect that this time around SMTC just might want to make a brief run below the bottom of that support range. If so, that would wash out quite a bit of longs & draw in some new short sellers, setting the stage for a potentially powerful reversal. A break below that range (should it be relatively limited in scope & duration) would also likely form bullish divergences and trigger another oversold reading on the RSI, similar to the late December/early February lows (first two arrows on this chart).
Regardless of my preference to stand aside on SMTC for now, if I had a nickel of every trade idea that I passed on that went on to play out for what would have been a nice gain, I’d have a very large collection of nickels. I’m here to share trade ideas & since I’ve been struggling to find many attractive new setups this week, I figured that I’d pass this one along for those interested. Although SYMC will be assigned to the Long Trade Setups category, it is only an unofficial trade idea, simply meaning that it won’t be added to the Active Trades category and I may or may not post any follow-up commentary on SYMC.
G-luck if you decide to take it and like always, only take trades that fit your unique trading style & risk tolerance and always have a plan before you take a position: i.e.- where you plan to take profits, if successful, and where you will cut the cord (stops) if wrong.