MCHP: Semiconductor Stock Topped, Now Look for Strong Support
Microchip Technologies stock, in the Semiconductor Industry, has a top that completed in early September, seen best on the weekly chart. This is a common top right now. I see it in many topping stocks. The trading range breaks to the downside, usually on company news. The question now is WHERE will it find sufficient support to commence a bottom? The answer lies within the technical and fundamental support levels. The stock is in a bounce to rebound price action over the past couple of weeks. This is not at a strong support level. The support for MCHP stock for a final low is the highs of 2016. This also coincides nicely with the typical bottoming location based on the percentage of loss from the all-time high. About a 50% loss is where many stocks are currently finding support and where some Dark Pool Buy Zones are beginning. These Buy Zones are at the earliest of stages and are not fully developed yet. This provides 2 important analyses for trading decisions:
1. Where you need to cease selling short entirely.
2. Where you need to start watching for a bottoming Dark Pool Buy Zone formation.
When you learn to do this type of analysis during a bear market, particularly a trading range bear, then you will be far ahead of the crowd.
Keep in mind that many stocks WILL dig deeply into the highs of the 2016 support levels. The highs are just where you need to stop selling short. It is not necessarily the final, final destination of the stock price before a bottom commences.
1. Where you need to cease selling short entirely.
2. Where you need to start watching for a bottoming Dark Pool Buy Zone formation.
When you learn to do this type of analysis during a bear market, particularly a trading range bear, then you will be far ahead of the crowd.
Keep in mind that many stocks WILL dig deeply into the highs of the 2016 support levels. The highs are just where you need to stop selling short. It is not necessarily the final, final destination of the stock price before a bottom commences.
Martha Stokes, CMT
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