This is the first of four stocks in the semiconductor sector which are on my watch list right now, and one where buying puts is the order of the day, or of course shorting the stock if you prefer. So why is this stock so weak?
First, we had a powerful signal in late July with the two bar reversal engulfing candle on extreme volume sending a clear and unequivocal signal of heavy selling of the stock. This was followed by further signals as the price action developed and in particular note the rising weekly price candles in green from mid-September through to early October with the volume falling away as the stock price regained the volume point of control at $34 per share. The reversal then took hold on rising volume coupled with the trend monitor indicator reverting to red and rising volume once more under the down candle. So where is this stock heading in the longer term?
Below there is little in the way of price support and therefore it is simply the volume on the VPOC histogram which may come to its rescue building as it does in the $24 to $20 per share area. However, if this fails to hold expect to see this stock descend further and test the strong platform of price-based support between $14 and $16 denoted with the red and blue dashed lines of the accumulation and distribution indicator. As can be seen, these are extremely strong, and therefore likely to provide an excellent platform of support in the longer term.
By Anna Coulling
Charts from NinjaTrader and indicators from Quantum Trading
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