Click chart to enlargeVECO has been trading sideways for the past several months. This may be discouraging to investors who meanwhile watched CREE rocket to new highs. But we're not in the least bit discouraged by VECO's recent performance. We see a perfectly healthy chart that needed to rest after a long run from early Nov to early Jan. VECO is wedging itself into an ascending triangle, an extremely bullish formation marked by higher lows and horizontal resistance. (see lines drawn on chart above).
All of this is happening within the trend channel, above an uptrending moving average, and with the backdrop of a relatively bullish broader market. This all points to an impending breakout for VECO to new all-time highs. We're early to point this out, as the stock is likely to struggle for a few days at resistance (+/-38) before making its move. Not all breakouts from ascending triangles are the same. A lot of its power is derived from the action of the broader market. If VECO can climb to 38, then have the market drop for a few sessions while VECO manages to tread water, then the rebound in the broader market will translate into a powerful breakout for VECO. Conversely, if VECO begins to break out and the market then decides to sell off for a few sessions, VECO's breakout may be thwarted. Regardless, it's important to note that with each passing day, this chart is bottling up more and more potential energy. We feel that it's only a matter of time before it reaches 40, which is more than 10% higher than its current price. With this one trade alone, an investor could statistically outpace the yearly performance of 87.9% of mutual fund managers.
7 comments:
Also check out AIXG. Its chart is as bullish as any, and it just produced a big buy signal by breaking an uptrending rsi resistance line. Many such lines have been and are in the process of being broken.
Shut up with your damn useless buy "signals" you incredible buffoon!
VECO got right up to the top of the ascending triangle today. Ideally, it would trade for a while right below resistance whil, wedging itself into the ever decreasing tip of the triangle and building up energy... then explode. If it does this, we'll be buying more VECO in anticipation of its breakout. It appears that we'll be buying at the top, but it's really at the bottom of the channel, near the moving average, after a healthy consolidation. What appears to be "the top" is actually just a platform from which it may launch its biggest move of all.
We'd rather see it stall in this area rather than try to break out. If it tries to break out after the move it made today, it'll likely run out of steam prematurely, producing a less dramatic explosion and attracting less attention. It should start its run fresh from resistance, not from support, ideally.
VECO broke out this morning with a 1.5 point gap, too late for us to buy more. Hopefully some of you were able to buy ahead of the breakout. Can't complain, VECO already comprises 10% of our portfolio. The breakout is not under ideal circumstances, as it was launched from the bottom of the channel, but it nonetheless speaks to the strength of the stock in that it continues to make new highs in a very deliberate and forceful way. We are always on the lookout for signs of fading strength, and today made it clear that VECO is healthy. We will continue to remain invested in it for the forseeable future. CREE wants to break out and move higher, too, but is already at the top of its channel. A breakout to the upside for CREE would put it in the nosebleed section and would make us uncomfortable over the short term. It's intermediate term outlook remains very healthy.
Snotwheel what is your ultimate target on VECO.. I mean in regards to sales i know tools are booming but dont you think customers are front loading tons of tools now only to find sales slow down 6 months from now? VECO has been a tough trade for me on and off cause it looks ready then it drops then looks ready then fails.. Some serious targets u think VECO can stretch too? 45-50 in the next couple months? 60?
Short term, 42.
43 would be pushing it. That's what the channel is showing, anyway. Over the next 3-4 months, though, it could easily see 50 or 60. It depends more on the broader market than anything else, which is why we never have a sell price target in mind. We just hold until a stock weakens. And don't pay much mind to sales or other fundamentals. The chart will give you the earliest indication of when earnings growth is slowing. If you look back at any aggressive growth stock of the past, its chart slowed down 6 to 9 months before its fundamentals did.
As long as the chart is within its channel and trading above an uptrending moving average, it should never cause you any stress. It's ok if it rests for a few months. It's even healthy.
Do you have any new sectors up your sleeve and stocks that could be the next wave like the led stocks?
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