(SanDisk Corp.)

http://finance.yahoo.com/q/pr?s=sndk
Even in the market chop that hit in early April as volume rose but the market failed to advance, SNDK continued to show its leadership qualities. Indeed while the market was chopping around SNDK used that action to consolidate another strong surge on its earnings. It was stair-stepping back down to test near support after that earnings gap and surge, forming an ABCD pattern. We were looking for an entry point when the May 6 'flash crash' hit.

Now many people are kicking themselves for not getting in on that precipitous plunge and reversal, but frankly many TRIED but could not get orders filled. We were seeing trades on AAPL at $99,999.99, BID (trading near $33) at $198, etc. Option spreads jumped to $3, $4 and $5 on stocks priced at $35. It was not a great time to buy because you did not know what you would get and indeed the system was overwhelmed.

Nonetheless we were watching our stocks we wanted, and when we saw SNDK hold at the 50 day EMA and start back up, and when we saw its option spreads start to normalize, we issued an alert to buy some SNDK as it made the recovery. Our subscribers picked up some SNDK at $39.15 and some August $40 strike call options for $4.45. The stock closed at $39.76 so we obviously did not get the low trade of the day, but if we had gone in during the height of the chaos we would have spent 50% or more on our options only to see them fall in value even as SNDK moved higher as the implied volatility component faded.

Of course on Friday the stock was lower but again it held the 50 day EMA and bounced so we held tight in the stock. Monday it gapped back up, closing at $41.54, putting us nicely in the black. Tuesday saw another recovery move as did Wednesday with SNDK closing at $44.27. Thursday SNDK gapped and rallied further, and in doing so it hit the early April high. That was our initial target for the ABCD pattern. You take some gain off at that level while letting some positions run; they typically test a bit, and then can surge once more into new high territory.

Sticking to our plan we banked some of the gain, selling some stock for $44.85 and a 14.5% gain. We also sold part of our option position for $7.05, banking a 58+% gain. Not bad for a week's 'work.' SNDK sold back after that Thursday gap and run; Thursday was a down day for the market. It sold again Friday in that market selling as well, but as a leader should, it recovered nicely off its low and held the 10 day EMA, a near support level for a stock trending higher, on the close. Of course it is not out of the woods: it ran into the early April peak and stalled, potentially forming a double top in a market that is overall under pressure. Thus, we are going to mind our trailing stop on the rest of our position, but as of Friday even though SNDK was down it was still showing it had buyers supporting it.

http://www.sandisk.com/homepage