I took the trade in Pharmaclyclics (PCYC) this morning – as it appeared in my scan as having higher than normal volume in the AM. Having traded and watched it quite a bit of late, this is one of those trades, where I saw it teste the 10-day moving average like it did previously and thought it would be worth taking a stab at, assuming it would hold again. Solid movers day-after-day like PCYC don't just lose interest from traders overnight, instead usually there is a large crowd waiting for it to pull back ever so slightly to jump in on the parade.
The worst case is I lose a little over 2% on the trade, and if the trade DOES work out, it could easily creep into the $60's. I'd say this is a valid buy anywhere between $55.50 and $56.60. Anything after that and your risk is greatly increasing compared to the possible reward of the trade. Bounce plays don't always work, and they don't even need to work 50% of the time, because when they do, the gains are usually very solid, if you can get in at or near key support levels, and keep risk as a bare minimum.
Here's the PCYC trade.
Be sure to check out Ryan's Blog at SharePlanner.com
