Skyworks Solutions (SWKS) was reviewed about three weeks ago and we recommended that, "If we pay more attention to the longer-term trend of SWKS, we want to stay long. If we focus on the short-term too much we might talk ourselves out of a good position. Until SWKS makes up its mind I would use a $99 stop loss order to control the risk."
Not long after this mid-November update the price of SWKS started to decline (see chart below). Prices broke below the declining 50-day simple moving average line and below the still rising 200-day line. We can see that the On-Balance-Volume (OBV) line turned down in early November telling us that sellers of SWKS had become more aggressive.
In the bottom panel is the 12-day price momentum study. So far price momentum has not slowed down yet, let alone signaled a bullish divergence. SWKS broke below the low of August and September and tested the late June/early July lows around $95. A weak close below $95 is likely to precipitate further declines.
In this weekly chart of SWKS, below, we can see that prices are below the rising 40-week moving average line. The weekly OBV line peaked in July and made a lower peak in late October. The trend-following MACD oscillator peaked in June and continues to point lower.
In this Point and Figure chart of SWKS, below, we can see that the June/July low at $94.55 was broken and then prices bounced to the upside. A retest of the $93.61 low is likely to precipitate further declines and will probably put a lot of longs under water. Notice the heavy volume at price bars (left scale) from $95.50 and above.
Bottom line: Without a bullish divergence from the momentum study I feel that I cannot (yet) recommend approaching SWKS from the long side. The $100-$110 area is likely to act as resistance for SWKS. Protect long positions and take appropriate action if we close below $94.
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