{"id":2925,"date":"2013-08-05T07:58:20","date_gmt":"2013-08-05T11:58:20","guid":{"rendered":"http:\/\/www.morpheustrading.com\/blog\/?p=2925"},"modified":"2023-01-19T00:02:52","modified_gmt":"2023-01-19T05:02:52","slug":"himax-himx-cup-handle-breakout","status":"publish","type":"post","link":"https:\/\/morpheustrading.com\/blog\/himax-himx-cup-handle-breakout\/","title":{"rendered":"Why Small-Cap Stock Himax Could Soon Blast Off Again ($HIMX)"},"content":{"rendered":"
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\"Himax<\/figure>\n<\/div>\n\n\n

After completing our weekend stock scanning research<\/a>, Himax Technologies ($HIMX) <\/strong>has entered our radar screen as a potential swing trade buy entry in the coming days.<\/p>\n\n\n\n

This small-cap tech company manufactures the liquid-crystal on silicon chips that power the displays of Google Glass<\/a>, and is presently forming the “handle” portion of a cup and handle<\/em> chart pattern.<\/p>\n\n\n\n

The cup and handle<\/a> is a bullish chart pattern that often precedes the strongest stock breakouts.<\/p>\n\n\n\n

Looking at the daily chart of $HIMX below, notice the depth from the high of the left side of the cup (mid-May), down to the low of the cup (late June), equates to a price retracement of over 40%.<\/p>\n\n\n\n

Although this is a bit wider than we like to see, bear in mind that $HIMX is only a $7 stock that is forming a base of consolidation after a gain of more than 100%. As such, a little extra volatility is to be expected.<\/p>\n\n\n\n

The same could be said for the handle, which should not retrace more than 15% from the highs in a normal cup and handle pattern. With $HIMX, the pullback was 19%.<\/p>\n\n\n\n

Again, this is fine because it is a volatile small-cap stock. Conversely, if the handle dipped 20% in a stock like Google ($GOOG), it would be ugly.<\/p>\n\n\n\n

On the annotated daily chart below, we have highlighted the cup and handle that has developed for this swing trade setup:<\/p>\n\n\n\n

\"HIMX<\/figure>\n\n\n\n

With this momentum trade setup, please be aware that $HIMX is scheduled to report its quarterly earnings results on August 15. <\/strong>Since that is only ten days away, our initial share size will be very small if the trade triggers for buy entry because we are only seeking a quick pop ahead of earnings. If, however, the stock blasts off in the coming days and we have a large enough profit buffer, we would hold the position through the earnings report.<\/p>\n\n\n\n

Our exact entry, exit, and target prices for this trade setup are restricted to subscribing members of our popular stock picking newsletter<\/a>. However, we will point out that our initial stop price on $HIMX is tight because this is a G.O.N.G (“go or no go”) trade setup.<\/strong> We want to be right or<\/em> be right out, as we are not willing to hold this stock for long if it doesn’t quickly take off.<\/p>\n\n\n\n

Finally, it is noteworthy to point out that $HIMX is not <\/em>an “A-rated” stock for us. This means if your portfolio is full (buying power is maxed out), there is no reason to cut existing positions to move into this stock. Nevertheless, a stock is still quite capable of outperforming even if it is not “A-rated.”<\/p>\n\n\n\n

For us, an “A-rated” stock is one with top earnings growth (usually small to mid-cap), solid volume, and overly positive price action.<\/strong> If a stock is slightly lacking in any of those areas, it is not “A-rated.” Two current examples of “A-rated” stocks are LinkedIn Corporation ($LNKD) and Michael Kors Holding Limited ($KORS).<\/p>\n\n\n\n

Which stocks are currently on YOUR radar screen for swing trade buy entry and why? Share your thoughts in the comments section below.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

After completing our weekend stock scanning research, Himax Technologies ($HIMX) has entered our radar screen as a potential swing trade buy entry in the coming days. This small-cap tech company manufactures the liquid-crystal on silicon chips that power the displays of Google Glass, and is presently forming the “handle” portion of a cup and handle chart pattern. […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_links_to":"","_links_to_target":""},"categories":[3],"tags":[],"class_list":["post-2925","post","type-post","status-publish","format-standard","hentry","category-stock-trading-strategy"],"_links":{"self":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/2925","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/comments?post=2925"}],"version-history":[{"count":2,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/2925\/revisions"}],"predecessor-version":[{"id":15490,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/2925\/revisions\/15490"}],"wp:attachment":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/media?parent=2925"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/categories?post=2925"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/tags?post=2925"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}