Tuesday, December 15, 2009

Atheros Communication (ATHR) - Best Performer of Late

After some puzzling behavior a month or two ago, considering it's excellent fundamentals [Oct 20, 2009: Atheros Communications Trounces Analysts Estimates; Increases Guidance], , Atheros Communications (ATHR) has been on a tear of late.  You'd think it was a Chinese small cap stock (which are the current speculation of choice among the "momo" crowd).  On Dec 1st, we wrote:

And Atheros Communications (ATHR) seems to be in first stages of breaking out of a double top...

This is the same "double top" breakout pattern that we have been utilizing with great success since May 2009 in the S&P 500 - until it stopped working about 2 weeks ago.  We did the same trade with good results in Potash (POT) as well a few weeks ago as well - it's generally a pattern that TA folks love to pile into, so it self reinforces much of the time.  This is how ATHR looked on the 1st...


It's always difficult knowing when to pull the chord on one of these, so the choices are a trailing stop of some sort and/or move to a shorter term moving average.  For example, below I plotted the 10 day moving average, which has not been penetrated in the month of December.  Current game plan is to just "hold on" until it is breached and then lock in profits.

[Sep 10, 2009: Bookkeeping - Starting Atheros Communications]

Atheros Communications, Inc. develops semiconductor system solutions for communication integrated circuit products. Its products comprise wireless local area network, mobile WLAN, Ethernet, bluetooth, global positioning system, and personal access systems.

Long Atheros Communications, Potash in fund; no pesronal position

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