Monday, December 6, 2010

Trade Alert: SVM

I have been wanting to get back into SVM so bad that I can taste it. We previously entered at $6.08 and sold at $11.36, it's currently trading at $13.08. But one look at the chart tells me it's a bit too risky right now. Notice the last month how the stock has moved up and away from its moving averages. There's a great deal of volatility. If we buy it here we may only regret to see it fall back to the 20 day moving average again.

I am not so concerned about the stochastics, even though they are pegged above 80%. As I've said before during a trend like this the stochastics will often stay pegged in the direction of the trend. What I'm looking for is to see SVM trade in a new range above $14 a share. I would rather buy it up there with a higher probability of the shares moving up than buy it at the top of the range only to watch prices fall. Obviously the moving gold and silver is just beginning so I don't want to wait very long to pull the trigger.

So, the plan is this. If the SVM breaks 14 with any strength we will step into a one half position. On the other hand if it falls back I will look to reenter on a rebound at a lower level. Either way don't guess just trade the break.

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