XLNX may be ready to break out after guidance raise

$XLNX made a perfect trendline test yesterday on news that it raised its Q1 revenue guidance by 5%. Although revenue is still down 14% year-over-year, the XLNX guidance raise suggests to analysts at Moody's that "broad based demand could be in a bottoming phase." XLNX has a relatively secure market position, with only one real competitor (Altera) and high barriers to entry for new competition. Moody's expects the company to continue to generate strong cash flow despite the challenging macroeconomic environment. Look for another trend line test and possible breakout in the near future.

Trading plan: I will buy at $91 support, and then ride XLNX to the trend line. I will sell at the trend line, and then buy back in if it makes a decisive trend line cross.

Comment:

XLNX got a confirmed breakout above the trend line 2 days ago, and has pulled back a bit but held above the trend line. Technicals look bullish from here.