Saturday, September 19, 2009

NVEC at Support

NVE Corp (NVEC) develops and sells spintronic devices (nanotechnology).

The stock has been in a strong uptrend in 2009 and has consistently found support at the 50-day moving average, providing a clear buy signal when the price touches the line and presumably a good stop level for traders. The stock tested the 50 DMA ($53.33) on Friday with a low of $53.50 (it recovered and closed at $54.66).

Another consistent feature of the trend has been the ability of RSI to signal buy points. As indicated by arrows in the chart below, the stock tends to recover soon after breaching the 50 level in RSI. Note that RSI dropped below 50 on Friday. RSI has also signaled short term tops throughout the uptrend.

I've included MACD and Stochastics in the charts below. They are providing mixed signals for the short term movement (MACD lines did not reach a new high with the recent peak, but the Stochastics from the sideways trending period Aug-Sept showed a bullish divergence preceding the peak).

Strategy: The RSI is signaling a buy here or ideally at a retest of the 50 DMA, with a stop just below the moving average.

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