Every so often I'll put up a point/figure chart of a stock that has had a major decline that actually looks like an attractive low risk/high return bullish play to the upside. Not long ago I did this with shares of Anchor Gaming (NASDAQ:SLOT).
Anchor Gaming Supply/Demand Chart - $1 box.
Gaming stocks are "boring", but back in December I profiled shares of SLOT as a good low risk/high return potential stock when it was trading near bullish support. Often times what can happen is institutions load up on a stock early in a cycle at lower levels and the stock runs higher, then consolidates and a short-term breakdown occurs right to bullish support. That's when institutions who "know what the future holds" comes in and rounds out their position. That's what we thought might happen with slot back in December. Now, what about this one?
Emulex Corporation Supply/Demand Chart - $2 and $1 scale.
It's days like today that I'm glad I learned to honor my stops and raise cash in my account. I'm also thankful for the options market where I can buy a call and limit my downside to a known amount. Now that some damage has been done to shares of Emulex (NASDAQ:EMLX) I can calmly ascertain if this stock is worth my time. Last night I was looking for stocks that have gotten drilled recently and I found EMLX. What I like about the stock is it trades right on top of our bullish support (blue +) and it has come very close to our "bearish price objective of $72". I actually like the stock here with a stop just below $71. If I'm patient and perhaps not opposed to paying a little more, I can wait for the markets to calm down a bit, but at least add this stock to my list of potentially bullish stocks to trade in the future.