Semiconductors are a sector that bounced back a bit better than the rest of the market recently, so when I see Silicon Laboratories (SLAB) lagging the group and already threatening the Aug. 24 lows, I get concerned.
SLAB just can't get anything going for it. The stock is down 15% for the year and 31% from its June highs, and we have this rounding pattern now that threatens to push shares lower:
I'm watching to see if we get a small sideways pattern here, which would form the "handle" on a bearish "inverse-cup-and-handle" pattern. Such a setup would require the stock to trade in the yellow box on the chart above.
I pulled half of the known universe of technical indicators to see if I could find anything encouraging for SLAB bulls, but there simply isn't anything to hang your hat on.
As you can see in the chart above, the longer-term MACD just crossed into bearish territory, which last happened in June right after the stock made a top. Everything else -- from momentum (Relative Strength Index) to trend (Commodity Channel Index) to volatility (Bollinger Bands) to price (Ultimate Oscillator) to volume (Force Index) -- also looks bearish here. If we do break here, then I will target a move to around $35.
The weekly chart shows a little more potential to make a bottom soon:
I see some possible bullish divergences setting up on the Relative Strength Index and Force Index, but the price action is ugly.
The stock is running at the bottom of its 10-week Simple Moving Average envelope of 7.5%. We traditionally see a bounce when this level is broken to the downside, but the bad news is that SLAB's late August/early September action looks to have been this bounce.
The stock has hit new lows each time the bounce has failed to pierce the upper side of the envelope. This last bounce failed, which leads me to conclude that the target on the daily chart will be seen before a bottom can be found.
Rather than $35, the October 2014 low of $36.29 may hold. So, my approach would be to take some profits into any $36 print and then follow with a tight trail.