Thursday, September 18, 2014

Thursday's Finalist: ALTR

The California semiconductor designer and manufacturer Altera Corp. (ALTR), with a bull signal, is the last symbol standing among the three that made it past the first round of analysis.

In truth, only two should have been declared to have passed the test. The bear signal on GPS was triggered by an error in the data provided by my vendor and ought to have been scrapped.

One other symbol made the finals, HOG, with a bear signal. However, HOG failed confirmation, rising back to within its 20-day price channel.

ALTR has two strikes against it.

First, the bid/ask spread on front-month at-the-money calls is 12.8%; I prefer spreads in the single digits.

Second, and far more important, is the chart. ALTR is not a trending stock. It has instead been tracing out a triangle for the past three years.

Click on chart to enlarge.
ALTR 5 years 2-day bars
Triangles of that magnitude can be played as a series of directional trades. Indeed, ALTR has only a dollar or so of upside room before hitting the boundary of the triangle.

A bearish reversal would have about $10 of downside room. But there is no guarantee that it would fall that far. Whipsaws are endemic in triangles as in, for example, the one within the yellow oval on the chart. The most recent leg of the triangle covered only about $5, top to bottom.

I might be willing to ignore the width of the spread if ALTR were otherwise attractive, and I would consider it if it broken decisively above the triangle boundary of $37.50 (as of today). But the chart is far from sufficiently bullish to support a trade.

I won't be opening a bull position in ALTR and will do no further analysis.

-- Tim Bovee, Portland, Oregon, Sept. 18, 2014


My shorter-term trading rules can be read here. My longer-term trading rules can be read here. And the classic Turtle Trading rules on which my rules are based can be read here.

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.
No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

Creative Commons License

All content on Tim Bovee, Private Trader by Timothy K. Bovee is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Based on a work at

No comments:

Post a Comment