Skyworks Solutions Inc. (SWKS) saw its shares raised to a fundamental Overweight rating (Buy) at a major sell side firm. Let's check out the technical potential of the semiconductor company.
In this daily bar chart of SWKS, below, I can see a bottom pattern playing out from May. Prices made a "left shoulder" in June and a "head" in October followed by a "right shoulder" in December. I have a hard time deciding where the "neckline" should be and do not (yet) see what I would consider to be breakout volume. The daily On-Balance-Volume (OBV) line shows a decline into December and is not following the price action and basing. The Moving Average Convergence Divergence (MACD) oscillator is above the zero line in positive territory but the two moving averages that comprise this indicator have narrowed and that warns of a weakening of the uptrend.
In this weekly Japanese candlestick chart of SWKS, below, I can see an improving picture. Prices are trading above the bottoming 40-week moving average line. The OBV line shows us lows in June and December and a better overall pattern than the daily OBV line. The MACD oscillator has improved since June and is ready to cross the zero line for an outright buy signal. Last week's candle shows an upper shadow, suggesting that prices have reached an area where traders are starting to reject the highs.
In this daily Point and Figure chart of SWKS, below, I can see a potential upside price target in the $168 area.
In this weekly Point and Figure chart of SWKS, below, I see the same $168 price target as the daily chart above.
Bottom line strategy: The charts of SWKS are stronger than they were a few months ago, but so far I am not seeing the kind of trading volume and a rising daily OBV line to confirm the price gains. In the near term shares of SWKS may trade sideways before renewed gains.
