IS $AMBA Ready to Squeeze higher?

Posted on Saturday March 26, 2016

$AMBA is on the top of my watchlist since my tweet Tuesday night. I believe the risk is well defined as I would not own it below the 30 minute prior swing low of 39.25 and I believe it could get to 54. Do the math on this one. We closed at 40.79, so we’ed risk about 1.50-1.75 to make 14.
Here is my thesis.

 

First let’s recognize the MASSIVE SHORT FLOAT.

Short float doesn’t mean squat without price action, but I think we are seeing evidence of the price action we need to move higher.

First on the big picture. It has retested it’s 2104 breakout level and is holding there.
We see a positive RSI Divergence existent on the Feb low and here in March we have potentially retested that low, setting a higher low. Judging my the name of this website, I think it is obvious I like those 🙂

On the daily chart, we see the stock is trading between the VWAP off the 2/9 Low and the VWAP off the 3/16 low. I would not own the stock below 39.50.

On the 30 minute chart, we are looking at the inverse H&S shown above. The risk here is failure of the VWAP and downtrendline at 39.50. I would use that to trade against. I would now own it below that level.
But using Thursday’s close. we are risking about $1.25.  Now if this thing can back above 42 I really think this squeezes the shorts with a 40% short float.

As far as target I think this can get to $54 as a first checkpoint, which is the 161.8 Fib retrace of the 31/1/16 high to the 3/16 low. For me the risk is very well defined here,

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