Quick technical update for a stock I mentioned on Twitter. A few weeks ago the stock printed a ‘Silent Alarm’ candle. Although follow through came with a delay, the implication is the same.

The ‘Silent Alarm’ pattern is simply a means to accumulate as many shares as possible while still flying under the radar before the run-up phase starts. Usually the day the stock gets accumulated on strong volume the stock closes almost where it opened or gives back almost all of its intraday gains leaving a seemingly ugly and bearish topping tail.

MVNR – Mavenir Systems has put in a complex inverted head and shoulders bottoming pattern. The stock looks like it will continue its run-up into earnings. This is obviously not a perfect set-up. Therefore conservative position sizing is advised. If the stock does react positively to earnings it will be time to add and hold for a potentially big winner in the making.

Click on MVNR chart to enlarge:

Conclusion: The reason I am bullish on MVNR is its potential to develop into a great story stock. More and more traffic will be generated by mobile devices like smartphones. VoLTE and VoWIFI plays are worth monitoring very closely. MVNR Mavenir Systems is one of the most interesting stocks in that sector I can find. Most importantly though, the technicals are now starting to support my assumptions. That’s when I initiate positions and shift my focus on managing risk.

Make sure to read MVNR’s company description from Yahoo finance in order to grasp the stock’s full potential:

Mavenir Systems, Inc. provides software-based telecommunications networking solutions. Its solutions, which are based on its mOne Convergence platform that enables mobile service providers to deliver Internet protocol (IP)-based voice, video, rich communications, and enhanced messaging services through their 2G and 3G networks, and next-generation 4G LTE networks to their subscribers in the United States and internationally. The company offers various voice and video products, including telephony application servers that provide voice, video, and supplementary services through broadband IP networks; voice over LTE interworking function products, which enables voice and SMS services in next-generation LTE networks; media resource function, a media processing engine; mobility application servers; call session control function products that provide subscriber and session management services; equipment identity register that allows operators to control access to mobile networks, deterring device theft and fraud, and enables provisioning of optimized services; and unified access gateway, a multi-application solution to authenticate end-user access to the converged services network. It also provides enhanced messaging products comprising Rich Messaging Server, a flexible IP messaging application server; messaging routers and gateways; presence and resource list servers; and XML document management system, a database system that supports the management and storage of user-generated content. The company sells its products directly, as well as through channel partners and system integrators. Mavenir Systems, Inc. was founded in 2005 and is headquartered in Richardson, Texas.

Hold your strongest stocks the longest and sell stocks that stop moving up or are acting sluggish quickly. Remember, stocks are only good when they are moving up. – Dan Zanger

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In order to find potential big winners in the making there is really not much you need to do. You look for big institutional volume footprints and you monitor how stocks react to earnings releases.

I cannot repeat this often enough: Trading is not about guarantees. It is about waiting for all the stars to align. When odds are in favour of higher prices down the road you need to be able to pull the trigger with confidence. The element of uncertainty simply cannot be eliminated, that’s why you have to manage risk in case things do not work out.

If you have trouble with the concept read this: Primer On Embracing Ambiguity.

That said, IPHI – Inphi Corp is one of the stock I am most bullish on right now. As I tweeted earlier it is part of the semiconductor group which looks like it is on the verge of a parabolic move to the upside.

https://twitter.com/Tischendorf/status/565986850683486208

In addition to being part of one of the strongest sectors out there, the stock itself is displaying all the bullish signs I am looking for:

  • Consistent bullish volume accumulation pattern
  • Bullish chart pattern. In this case a bullish ascending triangle
  • Bullish moving average expansion
  • Bullish reaction to an earnings release

Click on IPHI chart to enlarge:

Conclusion: As I wrote in my chart annotations, there is not much else you need to know. It’s really simple. In situations like these I simply go for it as odds are in my favour. Then I manage risk and let the market do its thing.

IPHI company description from Yahoo finance:

Inphi Corporation provides high-speed analog and mixed signal semiconductor solutions for the communications, datacenter, and computing markets worldwide. Its analog and mixed signal semiconductor solutions offer high signal integrity at data speeds while reducing system power consumption. The company’s semiconductor solutions are designed to address bandwidth bottlenecks in networks, maximize throughput and minimize latency in computing environments, and enable the rollout of next generation communications, datacenter, and computing infrastructures. Its solutions provide a high-speed interface between analog signals and digital information in high-performance systems, such as telecommunications transport systems, enterprise networking equipment, datacenters and enterprise servers, storage platforms, test and measurement equipment, and military systems. The company also provides 40G and 100G high-speed analog semiconductor solutions for the communications market and high-speed memory interface solutions for the computing market. Its products include amplifiers and modulator drivers, clock and data recovery, isolation memory buffer, register, and SerDes products that perform a range of functions, such as amplifying, encoding, multiplexing, demultiplexing, retiming, and buffering data and clock signals at speeds up to 100 Gbps. Inphi Corporation sells its products directly through its sales force, as well as through a network of sales representatives and distributors to original equipment manufacturers. The company was formerly known as TCom Communications, Inc. and changed its name to Inphi Corporation in February 2001. Inphi Corporation was founded in 2000 and is headquartered in Santa Clara, California.

As long as a stock is acting right, and the market is right, do not be in a hurry to take profits. – Jesse Livermore

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Quick update with my thoughts on a few stocks that are part of the IoT ‘Internet Of Things’ and the M2M ‘Machine To Machine’ sector.

The annotations I drew into the chart reflect my bullish bias for SWIR – Sierra Wireless, SIGM Sigma Designs and especially for MIFI Novatel Wireless.

  • SWIR – If the stock can move up in the near term it looks like it will set up a bullish ascending triangle
  • MIFI – I expect the upper trend line to be tested again. Then the next batch of news will determine the fate of MIFI. In view of MIFI’s recent strength and its extremely low valuation I still see the stock going much higher.
  • SIGM – I see further weakness first, then the chart should start to build a constructive and bullish ascending triangle pattern.

Technical analysis is a great tool to gauge odds of future price development, but if price doesn’t confirm my bullish assumptions I change my mind accordingly. No hard feelings.

Click to enlarge IoT + M2M Sector Overview Chart:

Once we realize that imperfect understanding is the human condition there is no shame in being wrong, only in failing to correct our mistakes. – George Soros

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The Biotech sector IBB, XBI, FBT etc. is still the best performing sector out there. The Semiconductor sector SMH, is acting very strong and is somewhat more interesting as single stock risk is generally less pronounced as opposed to individual Biotech stocks that disappoint. But Biotech is outperforming Semiconductors right now. So one simply cannot ignore the sector. That being said a Biotech stock I have been monitoring for quite some time looks like it is about to run right now.

I am talking about RGLS – Regulus Therapeutics. I mentioned I’ve been monitoring this stock for a while. You guessed right, it popped up in my scans the day it printed a game changing gap to the upside. It is really that simple. If you run scans and search for stocks with abnormal activity and huge volume, you will find all future big winners. Scanning alone is not enough though. It is simply a means to replenish watch lists. Then the hard work starts. Doing further research, being disciplined and patiently waiting for the stock to put in a consolidation and then entering a position once the stock flashes signs it might be ready to resume its new uptrend. I can only speak for myself, but the hard work part means I go through more than a thousand charts every day. For me personally there is no other way to get a feeling for the market. Enough said, on to the charts.

Click on RGLS chart to enlarge:

As you can see in my chart annotations RGLS – Regulus Therapeutics is displaying all the character traits I am looking for:

  • High short interest and low float stock
  • RGLS is trading above all the significant moving averages (20, 50, 100, 200)
  • The bullish descending wedge pattern has morphed into an even more bullish ascending triangle pattern
  • The stock displays an initial gap up and a thrusting move on huge volume, consolidated and is now about to resume its uptrend

If you are a regular reader you know what I am going to say now. Thrusting move, consolidation, resumption of the trend leading into the consolidation pattern in ABC pattern style. Simple straightforward analysis. There is really no need to overcomplicate things.

Remember: I am simply playing the odds here. There are no guarantees individual trades will work. Keep trading set-ups offering superior odds and keep managing risk. You will end up owning a few super winners every now and then. RGLS – Regulus Therapeutics sure is displaying all the needed ingredients. A great technical set-up and proper pattern pressure for RGLS to develop into a potential monster performer.

Show me the charts, and I’ll tell you the news. – Bernard Baruch

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The chart of SIMO – Silicon Motion Technology is a stock offering ‘Blue Sky Potential’. That will obviously only be the case once the bullish cup with handle pattern completes. A completion of the pattern will coincide with a break out to new all time highs. We are not there yet. Also keep in mind the company will announce earnings on Jan 26th.

Still, the chart looks very constructive and the All Time High should act as a price magnet. Overall the semiconductor sector looks very healthy. Therefore odds for stocks like SIMO to be outperforming are very high. The reason is simple: they have almost no overhead resistance. One way to play SIMO would be to buy an initial position and to add more if the stock reacts positively to earnings.

Click on SIMO chart to enlarge:

Conclusion: The whole reason for this post is to highlight a chart set-up with ‘Bullish pattern pressure + Blue Sky Potential’. This is the best and most bullish combination you could ask for. Of course earnings are due next week and as usual there are no guarantees. Then again, trading is not about guarantees but about putting odds in your favour.

SIMO company description from Yahoo finance:

Silicon Motion Technology Corporation, a fabless semiconductor company, designs, develops, and markets semiconductor solutions for mobile storage and mobile communications markets. It provides mobile storage products, including microcontrollers used in solid state storage devices, such as solid state drives, eMMCs, and other embedded flash applications, as well as removable storage products, such as flash memory card controllers and USB flash drive controllers; and mobile communications products, such as mobile TV SoCs and handset transceivers. Its products are used in smartphones, tablets, digital cameras, notebooks, desktop PCs, and industrial and commercial applications. The company’s mobile storage products are marketed under the SMI brand and mobile communications products under the FCI brand. It markets and sells products through direct sales personnel and independent electronics distributors to original equipment manufacturers and module makers worldwide. Silicon Motion Technology Corporation was founded in 1995 and is headquartered in Zhubei City, Taiwan.

I always believe that prices move first and fundamentals come second. – Paul Tudor Jones

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TSEM Tower Semiconductor – Pattern Pressure With Bullish Price Targets

January 20, 2015

The chart of TSEM – Tower Semiconductor is displaying an overall bullish look. There is a lot of pattern pressure as the stock has formed a bullish flag pattern. It looks like TSEM broke out to the upside today. If that’s indeed the case then TSEM should proceed to take out and close above 14$ [...]

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CCJ Cameco Uranium Stock Downside Trend Acceleration – Trading Opportunity

January 16, 2015

Right now one of the most visible and biggest Uranium stocks, CCJ – Cameco or CCO.TO in Canada, is offering a great trend following trading opportunity. I did a quick video analysis explaining what I see and analyzed the current technical situation from a psychological perspective. The key points are the following: Since Fukushima, which [...]

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BBRY Blackberry – Cloud Based Internet Of Things IoT Software Platform

January 10, 2015

If the Internet of Things ‘IoT’ is the next big thing, then BBRY – Blackberry with its recent launch of a cloud-based IoT platform has the potential to become a red hot stock. I bought an initial position as you can see here: $BBRY launches cloud based #IoT platform. High potential stock. Bought initial position. [...]

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MIFI Novatel Wireless – ‘Internet Of Things IoT’ High Potential Stock

January 5, 2015

Today’s winner in a sea of red is MIFI – Novatel Wireless, former ticker symbol NVTL. As I pointed out today on Twitter and Stocktwits when the stock was trading @ 3.30, right now this is my favourite really aggressive small cap play: $MIFI Holding up well the past few days. My favourite high potential [...]

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RDCM Radcom – High Potential Stock With Bullish Monthly Pattern Pressure

December 28, 2014

The Russell 2000 has just put in a 52 week closing high. Pattern pressure is huge, so if small caps start to outperform, this could be the beginning of a strong trend to the upside. Probably the most explosive small cap stock under extreme accumulation I can find right now is RDCM – Radcom. The [...]

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