STMicroelectronics Is Set to Trade Higher: Here's Our Strategy

Let's check out the charts and indicators of this semiconductor manufacturer.

During the Lightning Round segment of Mad Money Wednesday night a caller asked Jim Cramer about STMicroelectronics N.V. (STM) . "I like all of the semiconductors right now," was Cramer's response.

Let's check out the charts and indicators of this Geneva-based semiconductor manufacturer. 

In the daily bar chart of STM, below, we can see that prices were cut in half in just a few weeks in February and March. Prices have quickly rebounded to the upside to test the lower end of a $28 to $32 resistance zone. Prices are trading above the rising 50-day moving average line and the rising 200-day moving average line. We can see a recent bullish golden cross of the 50-day and 200-day averages.

The daily On-Balance-Volume (OBV) line shows a steady rising trend the past 12 months telling us that buyers of STM have been more aggressive the past years. Notice only a slight decline in the OBV line in February/March. The trend-following Moving Average Convergence Divergence (MACD) oscillator is above the zero line after its buy signal in late April. 

 

 

In the weekly bar chart of STM, below, we can see a bullish alignment of price and indicators. Prices are above the rising 40-week moving average line.

 

The weekly OBV line has been firming the past three months but has not yet broken out to a new high. The MACD oscillator is above the zero line and turning up for a fresh buy signal. 

 

 

 

In this daily Point and Figure chart of STM, below, we can see an upside price target of $37.

 

 

 

Bottom-line strategy: All three of our charts (above) are positive looking. Traders could go long STM at $28 or better risking a close below $24. Our nearest price targets are $32 and $37.

 

Employees of TheStreet are prohibited from trading individual securities.