Trading Idea - Momentum Building in Altera

Published on Monday, 09 January 2012 09:04 Written by Danny Miller

New York, January 9th (TradersHuddle.com) - Shares of Altera Corporation (NASDAQ:ALTR) closed the trading session at $37.49 placing the price action in a very tight range, given that calculated support is set at $36.66 and the calculated resistance based on an algorithm of peaks and troughs is set at $38.65

Altera Corporation (NASDAQ:ALTR) designs, manufactures, and markets programmable logic devices and associated development tools. The Company's products, include a variety of programmable logic devices and hardcopy application-specific integrated circuits. Altera serves customers primarily in the communications, computer and storage, industrial, and consumer sectors

Altera's stock price action indicates that both sellers and buyers are materializing very close to each other, which is indicative to a momentum building area, as the stock can resolve by breaking out of the tight range that developed.

Traders wanting to establish a position should place close attention to Altera's price action, as any movement outside its predefined range of $36.66 and $38.65 could grab the attention of momentum buyers, looking for a big movement in the price of the stock. Traders need to be aware that tight range resolution works both ways, hence, a move below support at $36.66 could spark above average selling. A tiered approach can be a good way to approach starting a position in Altera's, by establishing a starter position while the stock is in the tight range, and then adding to the position as it breaks and closes above resistance.