KLA-Tencor: Earnings release technical preview, extreme gap risk 10/28 12:45 PM



BULLISH CASE: On better than expected news/outlook the stock could trade to the upper limit of the short-term bearish price channel at $35.77. On a bullish breakout above the price channel the following resistance levels would become upside objectives: $36.63, $37.19, $37.81, $38.44, $39.05, $39.70, $40.35, $41. BEARISH CASE: A few more down days will see a bearish crossing of the 10-day and 50-day moving averages. In some technical trading systems, this is a confirmed sell signal. On worse than expected news/outlook the stock could trade to the lower limit of the price channel at $33.15. On a bearish breakdown below the price channel the following support levels would become downside objectives: $32.56, $32.07, $31.50, $31.00, $30.46, $29.66, $29.19, $28.75, $28.31, $27.87, $27.34. NOTE: Moderate short-base in terms of days to cover at 3, but with a very large 7.8% of the float short. Traders are positioned more for negative news. Reactions on a surprise, especially a positive one given the float-skew, have a high probability of being extreme in duration and price. Extreme gap risk.