Trading Idea - Momentum Buidling in Hewlett Packard

Published on Thursday, 29 July 2010 06:56 Written by Christian Paolinetti

New York, July 29th (TradersHuddle.com) - Shares of Hewlett Packard Company (NYSE:HPQ) closed the trading session at $47.57 placing the price action in a very tight range, given that calculated support is set at $45.27 and the calculated resistance based on an algorithm of peaks and troughs is set at $47.97

Hewlett-Packard Company (NYSE:HPQ) provides computing systems, imaging and printing systems, and information technology services for business and home. The Company's products include laser and inkjet printers, scanners, copiers and faxes, personal computers, workstations, storage solutions, and other computing and printing systems. Hewlett-Packard operates as a global company and sells its products worldwide through different distribution channels. Hewlett-Packard was founded in 1939 and is headquartered in Palo Alto, CA.

Hewlett Packard'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 Hewlett Packard's price action, as any movement outside its predefined range of $45.27 and $47.97 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 $45.27 could spark above average selling. A tiered approach can be a good way to approach starting a position in Hewlett Packard'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.