KLAC exceed the suggested stop of a move above 69.20 (69.21 stop) for a minor loss of 1.8%.
KLAC daily Sept 1st
I set the stops tight on this trade for two reasons:
1) Any move back above 69.20 would have not been consistent with the typical move following the breakdown of a bull flag pattern, which was one of the main reasons for the short entry. Typically, prices move impulsively lower following the breakdown of a bull flag continuation pattern, similar to the move leading down into the flag formation and as such, this recent bounce in KLAC was a sign of non-confirmation for that pattern.
2)The broad market continues to trade in an extremely tight sideways range and as such, I’ve been keep stops on many of the long & short trades on the tight-side as the potential for whipsaw buy & sell signals in a sideways market are increased.
I reviewed the semiconductor equipment & materials sector this morning & overall, the majority of stocks within the sector still look poised for a correction so KLAC may be revisited as another short trade soon along with some new trade setups in the group.