Don't Ignore This Chart!

Bullish Cup With Handle Breakout on Semi Stock

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Semiconductors have been one of the hottest areas of the market off the August low and especially during the month of October.  That's created a number of trading opportunities in the space.  I would consider Microsemi Corp to be one of those opportunities now based on its cup with handle breakout on heavy volume Friday.  Volume trends have been strong on MSCC throughout 2015.  A breakout and strong first quarter was followed by a negative divergence on its weekly chart in the second quarter.  That resulted in selling during the summer months and a reset of its weekly MACD at centerline support.  MSCC's latest rise printed the right side of a cup and after two weeks of consolidation (handle), it's broken out again with a measurement to 46.00.  The distance from the top of the cup (37.00) to the bottom of the cup (28.00) represents the measurement (9.00) that you add to the breakout level (37.00).  That provides a target of 46.00 in time.  Here's the chart:


At the bottom of the chart, you can see that the semiconductor index (DJUSSC) has been outperforming the S&P 500 once again while MSCC has been an excellent performer among its peers throughout 2015.  I'd expect this to continue based on the strong technical conditions in play.

Happy trading!

Tom

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Tom Bowley
About the author: co-founded Invested Central in 2004 and served as the site's Chief Market Strategist for more than 10 years. Invested Central provides stock market education and guidance for those interested in making their own financial decisions. During his tenure at Invested Central, Tom co-hosted Market Open LIVE, a national radio broadcast that covered many of the largest markets across the U.S. In addition, he has spoken at various conferences throughout the United States and Canada and has taught thousands of traders across the globe how to trade equities more wisely with an emphasis on managing risk and intermarket relationships. Learn More
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