Maxim Integrated Products, Inc. (MXIM) engages in the design, development, manufacture, and marketing of linear and mixed-signal integrated circuits. Its products include integrated power circuits, amplifiers, data converters, analog filters, transceivers, expanders, level translators, broadband switches, powerline communications, microcontrollers, data loggers, solar energy, and automotive.
Take a look at the 1-year chart of MXIM below with my added notations…
MXIM had formed a key level of resistance at $98 (green) over the past couple of months, but the stock broke through that resistance last week. That break should lead to higher prices, overall, for the stock. If MXIM comes back down to that $98 level, as it did on Friday, a support bounce might be expected.
A long trade could be entered on a pull back down to that level. However, a break back below $98 could negate the forecast for a higher move and could also be an opportunity to get short the stock.
Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.
No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!
Christian Tharp, CMT