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I am looking to set up a folder for position trades. What I try to do is buy stocks at support areas and ride them off the bounce. I believe this to be a low risk way to trade stocks, and very lucrative as well. Why? Because the type of trading I am doing is typically a bounce off a major moving average, with a tight sell stop order which minimizes the downside. In other words, either the stock bounces or we are stopped out. Another trade I look for is a stock coming out of a base. I have had some very nice results with both these trading methods. Some recent break out plays are ANDW, UTEK, TAM, ASIS, ATMI, and many others. If this type of trading interests you, start posting. Here is my next trade, COHU. Cohu is bouncing off support at the 50 day moving Avg and volume is picking up.
Here is an excerpt from Barrons in May::
<<"Semi Recovery
....Rhonda Brammer
Small-cap technology stocks, whose sky-high multiples and catapulting price moves make them darlings of the growth cult and the momentum crowd, also have great allure for value investors. But only after they've undergone a slight change from high tech to wrecked tech. Which is just what happened to semiconductor-related stocks late last year. As you may remember not too painfully, we hope the world was awash in chips, DRAM prices were plunging and orders for new manufacturing plants had virtually dried up. The only thing shrinking
faster than earnings estimates was the price of the stocks.
Nothing daunted, in a giddy moment last November, amid the enveloping gloom, we penned a bright note on Santa Clara, Calif.-based Electroglas, the sole domestic supplier of vital equipment for chip makers. Down from 40, shares were selling at 14 5/8. Book was $10, $7 cash. In the same foolhardy spirit, in this space in mid-December, veteran manager Scott Black recommended another equipment maker, San Diego-based Cohu, selling at 19. Book was about $10, $5 cash.
Electroglas closed Friday at 22 1/2, more than 50% higher than at the time of our November piece. But that's rather small potatoes compared with the 80% rise since December by Scott Black's favored Cohu.
With gains like those and in a span of months it seems only prudent to take a little money off the table. Frankly, that'd be our impulse. But Black insists he isn't selling a single share of Cohu. Even though the stock is now 34 1/2 and in December he expected it would take 12 to 18 months to reach that level. ``They could be earning close to $3 in '98,'' Black explains. ``That's why I don't sell the stock.'' First Call's consensus estimate for '98 is $2.50 a share.
``Too low,'' growls Black. ``They have great operating leverage in this business.'' He's looking for $2 a share this year, perhaps even $2.25. He has pared back his holdings of Teradyne and KLA because, in his view, their multiples have run ahead of their earnings. As for Cohu, as things stand, he'd ``probably sell it in the mid-40s.''
Founder and president of Boston-based Delphi Management, Black runs about $700 million in pension money, more than half of it in smaller names. So far this year, through Thursday, he's up 10.9%, after a 23% gain last year. What's more, Delphi boasts one of the best long-term records around: Over the past 17 years, Black's accounts have compounded, on average, 18.1% a year, compared with 16.1% for the S&P 500. Black is a rapid-fire talker with a terrific memory who, without time to prep, can recite chapter and verse on the 100-plus stocks in his portfolio. And among them, you can always count on finding a couple of small and intriguing ``wrecked techs,'' selling right near their lows.>>
I think COHU is going to test 36 shortly, and if earnings are good, I look for a break out. It reminds me of another thin stock I have made a lot of money on, ZIGO. Both are thinly trades companies that make good money, and are relatively unknown. Cohu still has 5 bucks a share in cash. |
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