These are the day when it can be difficult to buy anything. Equities and bonds are both lower. Gold miners are trading lower even as the metal trades higher. Volatility is on the rise. And the media is constantly chirping about bubbles and significant corrections. This is also the best time to look either at the strength on the day or names with recent good news. It is earnings season, so these selloffs can present an opportunity to grab names with solid reports in the past few weeks.
I'm eyeing Skyworks Solutions (SWKS). This chipmaker's stock has been on a major tear, up 140% over the last year and 36% already this year, so buying here is clearly not buying a bottom. However, this chart goes from lower left to upper right, which is the sign of a winner. Skyworks triggered one of my preferred buy patterns, which occurs when the long-term parabolic stop and reverse triggers a buy only one day after the short-term parabolic stop and reverse. Looking back to early 2015, we saw the same pattern. Furthermore, the price pattern of a wedge then holds a similarity to the current triangle pattern. While the Vortex Indicator has been some help, I only want to use that for confirmation. Furthermore, buying strength in the force index has been easier than trying to time a bottom when the force index pushes into the rest. The round number theory should come into effect here where we are drawn to $100, but then initially rejected. Conservative players will likely want to buy a bounce off $92 or a push over $100 after a first rejection.
The long-term chart, though, is the "make it or break it." There are concerns initially. We have a bearish crossover in the MACD and the RSI has retraced from above overbought to below. I hate seeing both of those; however, as long as $91 holds, I have to believe this is a bullish flag pattern, and a weekly close above $100 is going to trigger another significant move higher. Along with price, pay attention to the 13-week simple moving average against the on balance volume. A little dip is all right and likely an opportunity, but we don't want to see a big falloff. Furthermore, any price retracement should not see the RSI drop under 50.
A little more retracement in price should make for a very attractive long. Skyworks does have a decent options market, so using $90 calls to define risk -- or even $95 calls -- would be an attractive risk-reward play, but I would give the trade several months to work. A close below $90 should take traders out of long exposure, as it will likely dip all the way to $75 before finding major support. I could even justify a half position, watching the stock closely the next few days. For now, I'm opting to watch this closely, but I really am looking for any small reason, on top of the current charts, to buy.