Flipping to the short term, we can see that what needs to happen on the retrace is occurring -- volume is light as price retraces.

The two buy zones are shown on this chart, the first of which is within striking distance. I would look to start some small purchases around the $9 price level with the idea of buying on a further retrace short term. You do have to protect your holdings under the $8 level (take partial losses) because if prices retrace that far then the $6.75 to $7 level is likely to be hit. There's no need to hold all the shares on a retrace that deep if it was to come about, but do note that a retrace to that level is possible and would be a normal correction on a long-term basis if it was to occur.

Lastly, note the high volume spike high on the daily chart. Highs like those have a way of getting retested. That's the target on the upside and it is also why this stock holds such promise. The reward-to-risk is quite enticing. Just recognize that you have to trade these small stocks slightly differently.

So, until next time, keep trading the charts!

Please note that due to factors including low market capitalization and/or insufficient public float, we consider BOFI to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.

At the time of publication, Little had no positions in the stocks mentioned.
At the time of publication, Little was long BOFI.

L.A. Little is an author, professional trader and money manager who writes daily on tatoday.com, a free educational site for traders and investors. He has been featured in Stocks & Commodities magazine and is the author of Trade Like The Little Guy.

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