The set-up: TearLab Corp. (TEAR) has recently come off a 114 percent move; if you’re like me and use Fibonacci retracement tools, you can clearly see the set up for a 50 percent retracement bounce around $2.75.
The get-up-and-go: Now that TEAR has held over the 50 percent retracement, I’m looking for the move to happen if the stock breaks 38 percent retracement on the upswing.
The play: Short term, I’ll be looking to enter TEAR at $3.00 mental resistance break. If executed, my first target will be gains of 5 to 10 percent, putting the stock just above the previous high of $3.13 and right below the July 21 closing price of $3.34 which could act as resistance points.
I’ll take my profits between $3.13 and $3.34 and set my stops of $2.85.
Jeff Williams is the lead trader of PennyPro.com. He is a short-term trader of stocks under $10 a share. At the time this article was published on RagingBull.com, he had no open positions, options or orders of PTLA but was planning to trade the stock as described in the article. He last traded the stock for a small profit on July 21.