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NXP Semiconductors - NXPI - close: 80.32

01/11/15: NXPI displayed significant relative strength last week. Shares broke through resistance to close at all-time highs.

We had NXPI on our watch list. The plan was to wait for the stock to close above $78.50 and then buy calls the next day. Shares met that requirement with Friday's close at $80.32. Our trade begins on Monday morning. However, nimble traders may want to wait for a dip closer to $78.50 since NXPI is arguably short-term overbought with the big three-day bounce. Broken resistance near $78.00 should be support. I don't see any other changes from my earlier comments.

Earlier Comments: January 4, 2015:
The S&P 500 index added about +11% in 2014. The SOX semiconductor index more than doubled that with a +28% gain. Shares of NXPI, a Dutch semiconductor company, saw its stock outpace its peers with a 2014 gain of +66%. That's because investors believe NXPI is well positioned to take advantage of growth in the connected car, cyber security, wearables, and the Internet of Things.

The company describes itself as "NXP Semiconductors N.V. (NXPI) creates solutions that enable secure connections for a smarter world. Building on its expertise in High Performance Mixed Signal electronics, NXP is driving innovation in the automotive, identification and mobile industries, and in application areas including wireless infrastructure, lighting, healthcare, industrial, consumer tech and computing. NXP has operations in more than 25 countries, and posted revenue of $4.82 billion in 2013."

It's also believed that NXPI is a chip supplier to Apple (AAPL) and NXPI's chips are in AAPL's iPhone and iPads.

Earnings have been good. NXPI managed to beat Wall Street's estimates on both the top and bottom line the last four quarters in a row. Back in July NXPI raised their guidance. Influential hedge fund manager David Tepper, who runs Appaloosa Management, launched a new position in NXPI back in the third quarter of 2014. In early December shares of NXPI were upgraded with a $100 price target by Oppenheimer.

Technically shares of NXPI have been consolidating sideways at their highs for the last several weeks. The $78.00 level is overhead resistance. I am suggesting we wait for NXPI to close above $78.50 and then buy calls the next morning with a stop loss at $69.75.

Breakout trigger: Wait for a close above $78.50
Then buy calls the next day with a stop at $69.75

BUY the 2016 Jan $85 call (NXPI160115c85) current ask $10.20

01/12/15 Trade begins.
01/09/15 NXPI closed at $80.32, above our trigger, which was a close above $78.50
Option Format: symbol-year-month-day-call-strike

Chart of NXPI:

Originally listed on the Watch List: 01/04/15