Tuesday, November 2, 2010

Bookkeeping: Cutting Half of Atheros Communications (ATHR) as it Struggles at Resistance

I bought Atheros Communications (ATHR) a week and a half ago [Oct 22, 2010: Bookkeeping - Taking a Speculative Stab at Atheros Communications] on a lark ahead of earnings, since it was so darn cheap and it seemed bad news was priced into the stock.  The report was fine, although guidance soft - but the stock reacted well.  Not my usual strategy so my position size was smaller, but it worked out.   I usually use exponential moving averages, but there is no 'right' or 'wrong' (versus simple moving average) and the chart for ATHR says two completely different things if you use 'simple' v 'exponential'.  A reader pointed out the stock is stalling at the 200 day simple moving average - which is correct.  This is how it looks with simple moving averages....

After popping right to that level it pulled back the last three days before making another run at the 200 day simple moving average today.  Thus far, it has been rejected again.  I've decided to cut half the position here to lock in a quick 12% gain (bought a week ago Friday), and then watch how it does.  It if can jump over $32.00 - we're in business; one can buy the stock back for a mild premium if it can stay above that level for a session or two.  (then have a well defined stop loss area)  If it can't jump $32, this is probably the top of the move.  I've sold a 0.75% exposure, leaving about 0.75%.

For reference this is how it looks with exponential moving average reference (a much more bullish 'breakout')

Long Atheros Communications in fund; no personal position


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