This chip stock is set to surge in the next month, technician says. (via TradingNation)
"Here's the chart," Gordon said on CNBC's "" on Thursday. "We've begun a little bit of a consolidation here and as we zoom in, you're going to see that we have a little bit of a continuation head and shoulders … and that does indicate that we'd expect uptrend resumption."
A reverse head and shoulders pattern forms when a stock makes a low, a lower low and then a higher low. It suggests the reversal of a bearish trend. Texas Instruments' "right shoulder," formed in May, could signal that reversal. "If we zoom in there a little bit, you can clearly see that the breakout level in TXN is going to be just south of $120 here," said Gordon. "We have earnings coming up [in late July]. I'd like to put a trade on in anticipation of a break of that downtrend line right there."
The options market is pricing in an expected upside move to $125.53 on earnings. To ride that potential move higher, Gordon is buying the July 26 expiration 116and selling the 124 call for $3.06. This is a bet Texas Instruments can climb as high as $124 by that expiration date. It would knock out the old January 2018 record high of $120.75. It was trading at $116.50 in Friday's premarket.
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