Skyworks Solutions Could Decline Before Renewed Strength

SWKS reports Q4 earnings results after Monday's market close.

During Friday's Mad Money program, Jim Cramer told viewers his opinion of some stocks reporting earnings this week. Cramer said he'll be listening to hear from Estee Lauder (EL) , Clorox (CLX) , Skyworks Solutions (SWKS) , and PayPal (PYPL) today. He expects good things from all four, but advised to wait to buy PayPal until Tuesday.

Let's check out Skyworks Solutions which is scheduled to announce Q4 earnings results after the market closes Monday. We last looked at SWKS on September 10 and wrote that, "I will remain positive/constructive on the long side of SWKS as long as prices continue to hold above $130."

In this daily bar chart of the semiconductor maker and supplier to Apple (AAPL) , below, we can see that prices have held above $130 but have not been able to make sustained gains. Prices are trading below the cresting 50-day moving average line and above the rising 200-day moving average line.

The On-Balance-Volume (OBV) line shows a good rise from March to August but not much more upward progress the past three months.

The Moving Average Convergence Divergence (MACD) oscillator shows a weakening pattern from June and now is just slightly above the zero line. Close to an outright sell signal.  

 

 

In this weekly bar chart of SWKS, below, we can see some developing weaknesses. Prices are still in an uptrend above the rising 40-week moving average line but that is not the only thing we monitor.

 

The OBV line has been stalled since July and the MACD oscillator has crossed to the downside for a take profits sell signal. 

 

 

 

In this daily Point and Figure chart of SWKS, below, we can see a potential downside price target in the $123 area. 

 

 

 

In this weekly Point and Figure chart of SWKS, below, we can see a potential upside price target in the $206 area. 

 

 

 

Bottom line strategy: I do not mind an upside price target of $206 for SWKS, but I do mind a downside price target of $123 as that could precipitate a deeper decline. Raise sell stops slightly to $131. 

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