Wednesday, February 16, 2011

Will All Upside Gap Be Filled?

A Picture of a Nice River Gap in Between

Click on the above image to enlarge 
I have recently bought 7,000 stocks in Atmel Corporation at $16.40. I have dump almost all my savings worth around 100K ($25$ was taken out of my account to clear my off my housing loan) in this stock. The price of Atmel is now trading at $15.84 and  I have lost more than 3% as of today. Do I regret it?
Yes and No. Yes, because I should have bought at the current price of $15.84 and lower. No, because this stock can resume its superb upward move anytime and I may miss this bullet train. Whatever it is, it is all history cause I have already invested in it and all I can do now is to sit tight and wait.

However, I chooose not to sit tight and wait cause this is my life saving in here that I am betting on. I decided to ask myself a very important question which is, will the recent run up gap in Atmel be filled? If Atmel were to fill back the recent upward gap to $15.00 then I will lose more than 10% from the level that I have bought.
Although I believe there is always the possibility, but I believe that the probability is low.

I have seen more than few thousand charts during my last 13 years of trading the stock markets, some get filled and some dont. I believe in this case, Atmel recent run up gap will not be filled.

The reason is simple, the recent upward gap in Atmel is supported by the monstrous earning which they have reported in the latest quarter. Analyst from all over were upgrading this stock and raise its target price and earnings estimates. Moreover, the recent craze into the touch screen products have not ended. Indeed, some believe that this is the only beginning of more innovative touch screen products to be unveiled. People are all crazy about touch screen products now. Just look around you and the gadget the people are carrying, I be that 1 in every 3 person is carrying a touch screen product, whether is a phone, a MPS player, a Tablet or in the coming future, notebook will have touch screen on it.

This is truly a madness for this technology and Atmel is truly a montsrous ready to roar!

Click on the above image to enlarge

If you look at the above chart for Crus, you can see that there are actually 2 upward gaps which have not been fillled. Once Crus have the first run up gap, it consolidated on the upper gap level until it is ready to rocket further. Same goes to the second upward gap, it is also not filled and this stock continue to roar forward ahead.

I believe that the current consolidation above the gap is Atmel is a very good sign, as long as it does not come down to fill the gap at $15.00, this stock have a 90% chances to power ahead. If it does come down to the $15.00 and go below, then this stock should be sold as further downtrend is expected. In other words, the stop loss should be at the $14.50 level to be accurately confirmed.

However, based on my experience and my sixth sense, I believe that this stock will continue to consolidate at the upper side of the gap and above the $15.70 level and once it has consolidates and flush out the weak holder, this stock will definetely resumes it upward trend. Moreover, any good news or analyst upgrade on this stock will easily serve as a catalyst for this stock to resume it upward run. Somehow, it happens many time that usually before the stock resume its upward move, good news or upgrade will suddenly pop up. Is it a coincidence or stock manipulation? I don't know the answer to it, you will have to figure it yourself, but I believe the stock operator will know this answer very well.

I believe now is a very good time to catch this train if you are currently not riding on it. Once the train start moving, you will be able to catch it unless you willing to pay higher for the train ticket at the next station.

Good luck and happy investing!

Disclaimer : This is not an investment advisory, and should not be used to make investment decisions. Information in The Market Oracle Blog is often opinionated and should be considered for information purposes only. No stock exchange anywhere has approved or disapproved of the information contained herein. There is no express or implied solicitation to buy or sell securities. The charts provided here are not meant for investment purposes and only serve as technical examples. Don't consider buying or selling any stock without conducting your own due diligence. 


  1. Good call on Atmel! Already traded below $14. Are you still holding?


  2. I love it when some not so well known technology names like atmel get some coverage. All you ever hear in the financial news is apple apple and more apple.


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