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Today’s Trading Edge: Avago shares advance after Q4 earnings beat

Posted by WorldWideMarkets . on Dec 2, 2015 6:11:36 PM


Avago Technologies (AVGO) shares advanced after reporting a strong fourth-quarter that focused on reigning in expenses. The semi-conductor company reported fourth quarter profit at an adjusted $2.51 a share, a significant beat to the $2.38 forecast. Revenue grew 16% and came in with a $1.84 billion print, in line with the eyed $1.85 billion. The company also guided Q1 revenue at $1.78 billion, lower than the initial forecast of $1.84 billion. The stock is still benefiting from the news that they are moving forward with the acquisition of rival wireless-chipmaker Broadcom Corp.  

The bullish market reaction took price to a five-month high and noticeably above the $135.00 resistance level.

Price action on the AVGO daily chart shows that the bullish stance appears to be firmly in place and may not see resistance until the $150 zone. It is around that area that price could form both a double-top and ABCD pattern. Point D is targeted with the 161.8% Fibonacci expansion level of the B to C leg. If the bullish rebound continues and invalidates the potential reversal patterns, upside may target the $164-170 region. Further upside may eventually target the psychological $180 handle.

If we see price stall here and bearish momentum return, only a break of the noted $135 level would open the door for further consolidation. Deeper support may target the $120 support level.  

The Trade: Buy AVGO at $142.50, with a stop loss at $139.50 and a take profit at $148.50.  The Risk/Reward Ratio is 1:2 

Topics: Stocks, US Stocks, US equities


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