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Notes from this last dip...

The 50-day line, or the 10-week line on a weekly chart, is sometimes a place where a northbound stock takes a little rest. It's not a secure enough point to take a big position. Instead, it can be a secondary buy point, where the investor already ahead in a stock adds shares, maybe 5%, never more than 10%, to a successful position . Ideally, you want to see the stock fade to the line in light volume, but recover with gusto.

Old Dominion Freight Line (NASDAQ:ODFL) is a classic example. It broke out of a late-stage flat base after posting earnings Oct. 30. It ran up a bit, then got caught in the correction. On Wednesday it sank, found support and closed with a gain on high volume.


Netherlands-based NXP Semiconductors (NASDAQ:NXPI) is another stock making an almost classic pit stop at its 50-day line. There was one deviation. The bounce off the line was below the buy point from a recent breakout from a cup base.

It's in the sweet spot of the latest trend, secure mobile payments. NXP chips help enable Apple Pay, the mobile payment system in the iPhone 6.
Quarterly earnings growth has been accelerating, with the most recent quarter showing a 59% year-over-year increase. Analysts forecast 33% in the next report.

Ambarella (NASDAQ:AMBA), another chip stock, found support at its 50-day line. It's the second pullback to the line since the most recent advance in the stock began in early September. Generally, only the first two pullbacks to the line are safe secondary entries.
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