Today we added AAOI to the portfolio at 21.15 with an initial stop at 18.27. By risking a .50% of our account value, we were able to allocate 3.67% towards the trade. Similar to RTEC from a few weeks ago, AAOI turned back from its pivot area and closed down on the day. Earnings are just around the corner so I wouldn't expect much price appreciation until then.
Tonight, I really want to discuss RTEC and its pattern setup. We initiated this trade a few weeks back because the basing pattern had been developing over several years, and RTEC appeared ready to trend higher. RTEC's earnings were released this afternoon, so any price action will be a good indication of the direction RTEC wants to take.
Notice that RTEC has repeatedly reached the 13.50 area multiple times since May, only to be turned back down. While this was occurring, RTEC's fundamental picture continued to improve which is what sets the stage for moves higher. Since 2007 from a weekly perspective , RTEC had not been able to take out those old highs between 18-20, but RTEC's earnings relative to price have drastically improved. RTEC's technical and fundamental picture are now working together. Whichever way RTEC decides to move, we have a plan to manage the position accordingly. Our current stop is set at 12.13, risking .50% of our account value.
The 5 stocks below appear ready to trend higher or move out of their basing patterns. MPG made an impressive move today, and we will look for an appropriate time to enter. With earnings tomorrow, we chose to wait for the initial reaction. You can click the images to enlarge.