JDSU is forming one of my favorite patterns

Andy Swan created and co-founded DaytradeTeam five years ago on a principle of empowering individual stock and options traders with the techniques and analysis methods typically reserved for elite professionals. His expertise in technical analysis and commitment to educating members earned DaytradeTeam a top-ranking among advisory services for several years.

I'll admit it, when we bought (JDSU | Quote | Chart | News | PowerRating) a month ago at $2.97, I had no idea it was in for this kind of run. That's why I sold too soon (ALWAYS better than the alternative!) and got members a nice quick 6% profit. Since then, JDSU has had an awesome run, now sitting right at $4.00.

Now the next move for JDSU is obvious, and our Small Cap Trading System is prepared to pounce again for nice quick profits.

From the one-year chart above, you will notice that JDSU is in the very upper end of a well-defined trend channel. You've also got RSI levels near one year highs, and every time they've been this high, the stock has pulled back nicely.

We're expecting the exact same scenario to play out again. JDSU will pull back about 30-40 cents from here toward the lower end of the channel and provide an excellent "dip after breakout" buying opportunity.

Watch volume levels on the pullback very carefully, along with JDSU's performance relative to the overall market. These will give us the indications we need to tell us exactly when to jump in to the stock again.

Happy St. Patrick's Day,
Andy Swan