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Swing Trade Setup – SIMO

|Includes:Mallinckrodt PLC (MNK), SIMO

What I like about this setup:

  • Strong weekly where RSI has stayed above 40
  • Stayed above any significant support levels
  • Previous leader that could be forming next base (indicated in yellow) to rise out of

What could go wrong:

  • I would view it a negative if we fell below 61.8% Fibonacci
  • Lack of catalyst to stop this correction / many more distribution days

Action Plan:

Wait for this to show at least two consecutive up weeks with some constructive accumulation days on the daily chart. This recent sell off has given the ADX on the daily to cycle and could be signaling that a decent trend will emerge soon.

Obviously there was much buying into the last earnings report and I'm not too concerned that once earnings were reported that it gave back some of it's hard earned gains of 2011. Any stock that goes from $5 to $25 will give back on average 40% of those gains before turning around. We're currently right around those levels.

Past Trade Setups (there are some big winners here)

Trade Setup - QCOR

Swing Trade Review - SWI

4 Longs Worth Watching

Stocks: MNK, SIMO