For his final Executive Decision segment of "Mad Money" Monday, Jim Cramer checked in with Hassane El-Khoury, president and CEO of ON Semiconductor (ON) , a maker of semiconductors and sensors.
El-Khoury said semiconductors are in strong demand and every one of ON's end markets are seeing strength. Automotive chips, in particular, are in demand, he said, with environmental chips not far behind.
When asked about the growing shortage in semiconductors, El-Khoury said it isn't the volume as much as the velocity of the increase in demand. He said the industry can meet demand in another one to two quarters, but it wasn't prepared for the sudden jump in demand.
Let's check out the charts of ON.
In this daily bar chart of ON, below, we can see that prices are up four-fold from their March nadir. Prices are trading above the rising 50-day moving average line as well as the rising 200-day moving average line. Trading volume is active and the On-Balance-Volume (OBV) line is in an uptrend to confirm the price gains. The Moving Average Convergence Divergence (MACD) oscillator has started to diverge from the price action. The oscillator has just made a lower high when prices made a higher high. This could be the first signal of a correction.
In this weekly Japanese candlestick chart of ON, below, we can see a top reversal pattern the past three weeks. Prices are still in an uptrend above the rising 40-week moving average line. The weekly OBV line is strong and so is the MACD oscillator.
In this daily Point and Figure chart of ON, below, we can see a nearby price target of $44. A decline to $38.61 could weaken the chart.
Bottom line strategy: We reviewed the charts of ON last Dec. 22 and wrote at that time, "ON should continue to climb higher. Buy any shallow dip or pullback and risk below $26. $37 is just our first price target." Now that ON has reached and passed our $37 price target, traders should book some profits.