NXPI: ABCD completion looking for +25% I forgot how many times NXPI has changed owners, everybody loves NXPI silicon. After getting jilted on the alter by QCOM, NXPI is $2bn richer and running a $5bn buyback program. Stock is basing after an ABCD completion and exhibits signs of a positive divergence between the price action and MACD. Will look to take a small flyer at current prices with the recent trough providing reference for a stop and see if we get confirmation of a trend change to scale up. Expectation is for the stock to retest the 200-DMA which happens to be the 78.6% retracement level from the last peak.
Trade ideas
NXP Semiconductors (NXPI) is down: expect a recovery?NXPI share price plunged following a failed merger with Qualcomm. Many investors believe that the current market price significantly undervalues NXPI shares, so the company commenced on a significant buyback.
Following the deal termination, many analysts have issued price targets substantially higher than the current NXPI share price, and upgraded the stock to Buy. NXPI currently trades at a significantly lower valuation than its peers.
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NXPI is setting up in a large cup w/ handleThe semi-conductors are getting ready to make another run (check out SMH) and there are lots of names in the space that are looking strong.
I like NXPI for several reasons. Let's talk about the base:
1. It's setting up in a giant cup w/ handle that is about a year and a half long. The left side of the base is wide and loose and the right side of the base, particularly the handle area, has tightened up significantly. When we see tightness just as the pivot is forming, it allows a much more favorable reward to risk entry.
2. The long term moving averages (40wk line and 10wk line) are both turning upward, indicating momentum to the upside.
3. The RS line is leading the way and is trending higher
4. The lower part of the handle has pulled in quietly, on very light volume, into the 50dma. This both shows sellers drying up AND offers a good logical place for support
The industry group, as mentioned earlier, is setting up for a move higher. Per investors.com the semi-conductor group is ranked 5 out of 197. Additionally, in my own stock scanner ChartYourTrade MRI, (learn more here chartyourtrade.com) the semi-conductor group has returned the 2nd most number of stocks. When large numbers of stocks from the same industry group begin passing the scanner, its often been an indication that the group is preparing for a move. I believe we're seeing confirmation of that in SMH and in investors.com as well.