Wolfspeed Inc.'s (WOLF) stock is falling after Tesla (TSLA) suggested their next-gen car will cut silicon-carbide use. WOLF supplies a number of companies silicon-carbide semiconductors. Shares of WOLF opened sharply lower Thursday.
Let's check and see if we can domesticate the charts.
In this daily bar chart of WOLF, below, I can see that share prices have broken the late December/early January lows. WOLF trades below the declining 50-day moving average line and below the declining 200-day moving average line.
The daily On-Balance-Volume (OBV) line shows a decline into an early January low followed by a limited recovery. The Moving Average Convergence Divergence (MACD) oscillator has moved below the zero line for an outright sell signal.
In the weekly Japanese candlestick chart of WOLF, below, I see an interesting picture. The shares have made a potential large top formation. Prices surged to a new high in late 2021 but subsequent rallies in 2022 have failed at lower highs. Prices are still above the mid-2022 lows but I would not rule out a break of those lows in the current market environment. WOLF trades below the falling 40-week moving average line.
The weekly OBV line has plunged sharply lower since October telling me that sellers of WOLF have been very aggressive. The MACD oscillator is bearish.
In this daily Point and Figure chart of WOLF, below, I can see a potential downside price target in the $52 area.
In this weekly Point and Figure chart of WOLF, below, I used a five-box reversal filter. Here the price target is $50-$49 area.
Bottom-line strategy: Shares of WOLF are oversold and could bounce but the major trend appears to be lower.
