Wolfspeed (WOLF) is a developer of wide bandgap semiconductors that adopt silicon carbide and gallium nitride technologies. Shares of this cutting-edge company were raised to "buy" by a major sell-side firm Friday. Let's check out the charts because I certainly do not understand the technology.
In the daily bar chart of WOLF, below, we can see that the shares have been under selling pressure since November. Prices made a new low this month and trade below the declining 50-day moving average line and the declining 200-day line.
The On-Balance-Volume (OBV) line has been weak since April and tells us that sellers of WOLF have been more aggressive than buyers with heavier trading volume being executed on days when WOLF has closed lower.
The 12-day price momentum study shows a higher low from May to June even though prices made a lower low. This difference in movement between price and indicator is a bullish divergence and is potentially a sign of higher prices to come.
In the weekly Japanese candlestick chart of WOLF, below, we see a mostly bearish picture. Prices are in a downtrend and trade below the declining 40-week moving average line. I can see a harami star pattern (a harami with a doji) but no bullish confirmation just yet.
The weekly OBV line is bearish and so is the MACD oscillator.
In this daily Point and Figure chart of WOLF, below, we can see a potential downside price target in the $39 area. A trade at $64.14 can start to improve the picture.
In this second Point and Figure chart of WOLF, below, we see a downside price target of $38.
Bottom-line strategy: Aggressive traders could probe the long side of WOLF after the stock closes above $66 to give us some confidence that a low has been made. Risk to $59. Our price target is the $90 area.
