It is a rare day that I will get involved in any online forum discussion, however, with the SWKS chart pattern being so obvious, I felt compelled. In one of the networks, I advised readers to be cautious on the stock, and I alerted them that the max upside move for this equity (which was trading a couple of points lower below its recent high) would be around $59.50. At the time, many took offense of my comments (which is no surprise when entering the world of anonymous/ill informed internet posting), others even balked at what I referred to as an "overbought" and an "extended" move in Skyworks Solutions Inc (NASDAQ:SWKS) when analyzing the bigger time frames. However, this reaction was even more confirmation for me that the stock was ready to move lower, fast. Sentiment is a very powerful tool for the smart trader - you must be aware of it.
After reaching the max move level, Skyworks Solutions Inc (NASDAQ:SWKS) proceeded to move lower by 10% from its recent high. This trade could not have been made more obvious to the smart trader; from the sentiment of the "masses" to the clear chart signals. While many only look at one time frame when analyzing a stock chart, you must always look at different time frames of any equity in order to have higher odds for a profitable trade/investment. Also, considering the overall sentiment on the stock, like this example, will only enhance your odds further.
Take note of the monthly chart for Skyworks Solutions Inc (NASDAQ:SWKS) below. Now, even if you do not know a single thing about and chart reading, would you think it is wise to go long/buy a name that has already moved from a recent low of $19.57 to a recent high of $59.25? I certainly hope not.
When an equity has a move like this, NEVER chase it, as moves like this often result in a sharp sell off from the highs. As smart investors and traders, you never want to find yourself holding the empty bag at the top, and the sequence of this trade was a clear example of how so many ill informed "traders" are last to get out... with a loss.
If you have an example of how you took a trade when the sentiment of the masses alerted you to enter on the opposite side, feel free to comment below.
Now, Skyworks Solutions Inc (NASDAQ:SWKS) will find some support around the $49.25, but an even better looks to be the $43.98 area. I will be monitoring this equity and issuing an alert to Elite Round Table members once we get the proper Price, Pattern and Time in place.
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