Wednesday, September 29, 2010

Potential Darvas Box Breakout, ENTR

A trade idea I'm watching is ENTR (Entropic Communications, Inc), which has formed a pattern of stacking boxes and could test the top of its current multi-week Darvas box at any time. The top of the box also coincides with a round-number ($10.00) that could add a little something extra to the breakout. If it does break out, it would be reasonable to wait until it is 10 cents or so above the box and then a reasonable place to put a stop would be just below the top of the box, say 9.95. My main hesitation is that this stock hasn't displayed a pattern of 'explosive' breakouts. Note that many of the recent breakouts have fallen back into the trading range after a few days. It might be different this time, or it might not, who knows. Despite the uncertainty, I like this trade because there is a clear uptrend, lots of upside potential, and an only a small amount of risk. Here's a daily chart:
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