NEW BULLISH Plays
Broadcom Corp. - BRCM - close: 27.84 change: +0.44
Stop Loss: 26.49
Current Gain/Loss: unopened
Entry on July -- at $--.--
Listed on July 30, 2013
Time Frame: 6 to 8 weeks
Average Daily Volume = 13.1 million
New Positions: Yes, see below
Why We Like It:
It's been a rough month for Broadcom. The company makes a variety of semiconductors. Unfortunately for shareholders prior to the earnings report the market did not like what they heard in the conference call. Quarterly results were one cent above expectations. Yet in the conference call BRCM's management guided their Q3 revenue estimates lower. A wave of analyst firms downgraded the stock. Investors panicked fearing that BRCM was losing market shares. The stock collapsed on July 24th with a big gap down and a dip to $26.63.
So far the July 24th and 25th lows near $26.60 have held. It looks like BRCM fell victim to a knee-jerk reaction because there hasn't been any follow through selling. Instead the stock has quietly consolidated sideways. Now it's starting to rebound.
We suspect that all the bad news has been priced in. If the market cooperates we are likely to see BRCM try and fill the gap down.
Today's high was $27.91. I am suggesting a trigger to launch small bullish positions at $28.05. If triggered our target is $31.00 although I will point out that it is possible the $30.00 level could act like round-number resistance. We will start with a stop loss at $26.49 but more conservative traders may want to use a stop loss closer to $27.20 instead.
Trigger @ 28.05 *small positions*
Suggested Position: buy BRCM stock @ (trigger)
- (or for more adventurous traders, try this option) -
Buy the Sep $30 call (BRCM1321i30) current ask $0.37