Chart of the Week: Silicon Motion Technology
Hey good morning, everybody. It’s time for our chart of the week, and we’re gonna be focusing on really hot chip name – chip equipment name – Silicon Motion. Symbol is SIMO. Let’s take a look at this one. It’s been pretty hot since the breakout in late April.
As you can see from the chart over here, we’re in a nice series of higher highs, higher lows – our textbook definition of an uptrend, right? Higher highs, higher lows.
It had been rising nicely on some pretty strong volume – in March and in April. Bounced lower at the end of March over here. And it just had a fabulous month of April. Finished up with a big huge gap higher at the end of April, and it’s been making higher highs, higher lows. It’s really a narrow channel here the stock’s been in. And you can see that going up.
Will it end? I don’t know.
But certainly that candle that it made on Monday, May 11 is not friendly. If the stock does come back, it may come down over here, bounce over here a little bit, consolidate a bit, and make a run higher. I think the stock’s got some room to get up to about the $320 level eventually.
We had some good volume here again, to the upside here, and this candle held firm over here.
So if the stock ever does pull back significantly, you’re gonna wanna see this level hold. Let’s call it about $195-196.
MACD is real strong. It’s been on a buy signal for about six weeks.
Relative strength is overbought right now.
And again, what do we do with overbought? We just understand that overbought is simply a condition, it’s not necessarily a signal to sell or to buy. It’s a condition that tells you what the stock is in at this point in time and to be on alert for a bit of a pullback. If we get that pullback of about say, 7-8%, maybe it gets down to $270, $265, something like that, that’s gonna be an area where you want to start thinking about pulling the trigger and buying it.
But still, I wouldn’t mind adding a little bit more here. This stock has been strong, it’s been in an uptrend. And again, we don’t know when that uptrend is going to end. Could it end at $300? Could it end at $310? I don’t know, but you wanna make sure you have a position on when the stock is moving.
I’m a momentum player, and I like to buy stock with really strong momentum. Nothing better than Silicon Motion in the universe of stocks at this point in time.
Check out SIMO – Silicon Motion. Thanks so much for watching everyone.
