- A Selling Climax and Retest for Broadcom.
- Analog Devices, Qorvo and Semtech.
- Danaher Extends String of Higher Lows.
A Selling Climax for Broadcom
Broadcom (AVGO) hit a potential reversal zone on a selling climax and could be poised for a rebound. First and foremost, I readily admit the Broadcom is not "On Trend", at least not on an uptrend. This makes it a bottom pick with above average risk.
The price chart shows a selling climax with massive volume in July. Notice that prices immediately rebounded near the 61.8% retracement with a two week bounce on strong volume. AVGO fell back to the climax lows, firmed last week and bounced this week. This retest of the low could set the stage for a decent bounce.
Analog Devices, Qorvo and Semtech
I showed the Semiconductor SPDR (XSD) breaking out to new highs in Don't Ignore this Chart and this shows strength within the group. Here are three more charts to consider going forward. Note that Broadcom is also part of the semiconductor group.
Analog Devices (ADI) broke out of a falling wedge to end its correction and signal a continuation of the bigger uptrend.
Qorvo (QRVO) was featured in late July as it broke out of a triangle. Even though the triangle breakout failed, I do not think the chart is broken because QRVO is firming at support. Notice that six inside days formed as the stock consolidated after last week's sharp decline. RSI become oversold and this could pave the way for a mean-reversion bounce. QRVO is still “On Trend” because the 50-day EMA is above the 200-day EMA.
Semtech (SMTC) surged over 60% from February to June and then consolidated with a trading range this summer. A consolidation after a big advance is typically a bullish continuation pattern and this favors an upside breakout.
Danaher Extends String of Higher Lows
I have been following Danaher (DHR) for many moons waiting for a breakout and move to new highs. The chart remains bullish overall, but the new highs remain elusive. That may soon change. Even though DHR has been flat since January, a bullish ascending triangle is taking shape.
Let's break down this bullish continuation pattern. The higher lows reflect buying pressure coming in at successively higher prices (shallower dips). The equal highs in the 104 area represent the line of overhead supply, which is where the selling pressure appears. A breakout here would signal a victory for demand (buying pressure) and target a move to around 128. The height of the pattern is around 14% and a 14% gain from the breakout zone would target a move to this area.
Looking within the pattern, I see another higher low from July to August and a short-term breakout with the surge on Monday. This move reversed the downswing from late July to mid August. I now expect another challenge to resistance and a breakout at some point.
On Trend on Youtube
Available to everyone On Trend with Arthur Hill airs Tuesdays at 10:30AM ET on StockCharts TV and repeats throughout the week at the same time. Each show is then archived on our Youtube channel.
Topics for Tuesday, August 28th:
- Industrials Extend as Materials Surge (ITA, DWDP)
- Finance and Brokers Pop, but Regionals Flatline
- Focus on Finance (GS, JPM, MS, BAC, C, SCHW)
- Biotech ETFs Surge (XLV, IHI, IHF hit new highs)
- Ask Arthur: GoldenX, Market Timing, Bond/$ Correlation, Scan Code
- Stocks/ETFs to Watch: ITB, PX, TMUS, MRO, NOV, ICE
Questions, Comments or Feedback?
I cannot promise to response to all correspondence, but I will read it and take into under consideration. I greatly appreciate all feedback because it helps me improve the commentary and provides ideas for the future. Sorry, I do not take symbol requests.
Plan Your Trade and Trade Your Plan.
- Arthur Hill, CMT
Senior Technical Analyst, StockCharts.com
Book: Define the Trend and Trade the Trend
Twitter: Follow @ArthurHill
