JDS Uniphase (JDSU - commentary - Trade Now) is one of the top percentage gainers on the Nasdaq this morning. After beginning the day with a powerful breakaway gap, the stock went up over 12% and traded back above the $8.00 level, putting it just shy of its 2009 highs set eight weeks ago at $8.40. Volume on the breakout is absolutely huge and is already over 4 times the stock's 50-day moving average, making it the heaviest positive day for the stock since February 2008.
The breakout today extends a big move off the October lows. JDS Uniphase closed out last month at 12-week lows after a steep pullback from the September highs. The stock held support near its 50-day moving average in early October but failed to attract much in the way in volume. JDS Uniphase rolled over on Oct. 23, leading to seven straight down days. This month began with a sharp turn after the stock found support just above its 200-day moving average. Volume picked up dramatically last Friday as the rebound traded higher for the fourth straight day. By this time, JDS Uniphase had already rallied 15% on the week and had taken out trendline resistance. This week began with another 7% of upside that pushed the stock back above its 50-day.
JDSU Daily (Nasdaq) -- JDS Uniphase
Source: TradeStation
JDS Uniphase now has a solid base of short-term support underneath that will help it maintain its upside momentum through year-end. I expect the $7.25 to $7.00 area to hold on a pullback. Considering that the stock is is up over 35% in less than two weeks, a healthy retracement is likely in the next couple of weeks. I currently have a small long position in the stock and will look to add on weakness. I will be using the January 2008 lows of $9.50 as an upside target. There is quite a bit of supply between that level and the $10.00 area.
P.S. Will you be there when Cramer makes his next move?
Strong brands and companies with vast market exposure can help bolster your portfolio. Jim was able to lock in a 64% gain by buying Ingersoll-Rand at $13 and selling at $22.50. Action Alerts PLUS members were the first to see these moves. Were you among them? Get Free Access Today!
Technical Analysis S&P Futures Trade Update 11/12/2009 9:37 AM EST We have been bullish for months, but now is the time to unwind those positions.
Technical Analysis Trading With the Russell 2000 11/11/2009 3:45 PM EST The Dow is no doubt a better buy-and-hold index, but I prefer the Russell 2000 for trading.
Technical Analysis A Move Down Would Be Bullish 11/12/2009 7:45 AM EST A pullback could give the market a chance to break out on volume and momentum.
At the time of publication, Morrow was long JDSU.
Gary Morrow is president of Yosemite Asset Management, LLC, a registered investment advisory firm in San Luis Obispo, Calif. He manages individual accounts through Charles Schwab and runs a long/short hedge fund. Prior to forming Yosemite, Morrow spent 12 years on the floor of the Chicago Mercantile Exchange trading foreign currency and interest rate futures. He holds a bachelor's degree in economics from Ripon College.
RSS FEEDS
PODCASTS
