Let's notice that during the August corrective period, Qualcomm (QCOM) has carved out a contractionary, coil-type consolidation pattern in the aftermath and atop its prior explosive upmove from the July low at 31.51 to the Aug high at 40. At its deepest corrective price of 37.45 at the August 16 low, QCOM had retraced only 30% of the entire prior upleg.

As of this moment, QCOM is trading above 80% of all of its action since the July low, which is a very impressive feat, and a bullish sign. The overall picture is very constructive for upside continuation from the coil, which projects to 42.00/50.

Of course, the question for me during these extremely volatile times is whether or not I can expect a stop 2% beneath my entry price to survive the intraday noise that continues to clutter every trading hour lately? Maybe not, but purely from a technical perspective, let's notice that today's first-hour whipsaw spike from 38.80 to 38.00 back up to 38.80 appears to me to have put in a third important spike low since mid-Aug.

That tells me that if today's low at 37.98 is taken out, I should not stick around to find out just how much more weakness will be forthcoming. I should bail out, see what happens in the hour(s) immediately thereafter, and if another Bear Trap emerges, determine the wisdom of reentering long positions.

It is with the foregoing in mind -- a bullish Jul-Aug pattern, followed by a tightly defined consolidation -- that tells me to be vigilant about protecting the position just beneath 38.00, intraday noise or not.

 

Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com.