During the Lightning Round segment of Mad Money Monday evening one caller quizzed Jim Cramer about Taiwan Semiconductor (TSM) . "You're in good shape there. I would buy it at these levels," responded Cramer.
Let's check out the charts of TSM.
We last looked at TSM on Feb. 2 and concluded that, "I do not feel confident in the long side of TSM at this particular point in time. Trading volume was heavier in January but prices moved lower. I get the sense that we may have seen a shift in ownership."
In the daily bar chart of TSM, below, we can see that the shares worked lower after our Feb. 2 review. Prices are now testing the underside of the cresting 50-day moving average line. The 200-day moving average line is still rising and intersects around $97 or so.
The On-Balance-Volume (OBV) line declined from the middle of February to later in March but may have started a fresh advance. The Moving Average Convergence Divergence (MACD) oscillator has crossed to the upside for a cover shorts buy signal.
In the weekly Japanese candlestick chart of TSM, below, we can see a bottom reversal pattern of a hammer last month. We can see a bullish candle following the hammer to give us confirmation.
The weekly OBV line is starting to improve again and the MACD oscillator is starting to narrow.
In this daily Point and Figure chart of TSM, below, we can see an upside price target of around $152.
In this weekly Point and Figure chart of TSM, below, we used a traditional even-dollar scaling. Here the chart shows the $163 area as a price objective.
Bottom-line strategy: I spent a week teaching technical analysis in Taipei to overseas students of Baruch College. Very interesting country. There was slight tremor (a.k.a. earthquake) while I was there and when I played tourist one day I rode on the same train that had just derailed. The charts of TSM are now looking positive and traders could go long TSM on a pullback to $120 risking a decline to $109. The $152-$163 area is our price objective.
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