Managing PLCM Trade after Stock Gained 13%


Polycom’s stock surged yesterday gaining 13 percent on the market’s close proving my 40-days old [intlink id=”2269″ type=”post”]PLCM stock pick[/intlink] correct! Back then I had applied basic technical analysis on the monthly chart and decided to risk going long PLCM, setting a stop loss right below the last price level the stock price found support. I had also mentioned that I would trade 70% of the position out at $22 but given the strong opening gap I am willing to see how the stock behaves the following days and possibly find a better exit pattern setup in the daily chart.

It is safe to say that the previous resistance support at $16 has been converted into a support level. The stock bounced off the 50-month moving average with notable precision and will likely head north, closing in to the resistance level at $34. Another positive sign is the increasing volume in the daily chart. Would I buy PLCM shares now if I weren’t long already? I doubt it, as the reward-risk ratio would be through the roof. I would most likely look for a pullback for safer trading.

Yesterday’s upwards price move was due to the provider of telepresence and video services posting better-than-expected quarterly numbers which has also led FBN Securities to lift the PLCM price target to $25.