Cypress Semiconductor Corp. (CY) broke out to new highs for the move up last week. When we looked at the charts in late October, we noted that, "Because CY was not very extended on the upside like some other tech names and significant chart support is nearby, we should only see a mild and shallow correction for the stock." Chart support developed around $14.25 as our Point and Figure chart indicated and then the advance resumed. Are there more gains to come or is the rally extended now? Let's check the charts and technical indicators for whatever guidance they might provide this morning.
In this daily bar chart of CY, below, we can see a strong upward channel since August. Prices are above the rising 50-day moving average line and we can see tests of the rising 200-day line in early December and early February of this year. The daily On-Balance-Volume (OBV) line has been rising since April and tells us that buyers of CY have been more aggressive for months. This kind of volume confirmation is what chart watchers love to see on a stock. The trend-following Moving Average Convergence Divergence (MACD) oscillator gave a cover shorts buy signal and an outright buy signal in February.
In this weekly bar chart of CY, below, we can see that the uptrend began in early 2016. Notice how well the rising 40-week moving average line has defined the trend? No random walk here. The weekly OBV line has also been rising the past two years and tells us that buyers on this timeframe have also been aggressive and have accumulated shares. The weekly MACD oscillator has been above the zero line since June of 2016 and is pointed higher now.
In this Point and Figure chart of CY, below, we can see the breakout at $18.13 and a conservative price target of $23.86.
Bottom line: The charts and indicators on CY all point higher. Aggressive traders could use any weakness near-term toward $18 to buy or increase their current long exposure. Risk below $16.00 looking for gains to the mid-$20s initially.