New Bullish Pattern Developing on This Semi Stock’s Chart

Microchip Technology appears to be forming an inverse head-and-shoulders


Microchip Technology (MCHP) — This leading semiconductor manufacturer develops specialized chips for embedded control applications. Since 1990, it has shipped over 7 billion PIC microprocessors.

Earlier this month, the company raised EPS guidance $0.02 for its fiscal first quarter, scheduled to be reported on July 29. Credit Suisse has increased its estimate for fiscal year (FY) 2014, ending in March, from $2.26 to $2.30, and its estimate for FY 2015 from $2.54 to $2.67. The stock has a dividend yield of 3.8%.

For seven months, the stock traded within a 9-point range from $29 to $38. But buying volume is increasing, our internal indicator, the Collins-Bollinger Reversal (CBR), recently flashed a buy signal, and the new pattern forming from the handle of an extended cup-and-handle appears to be an inverse head-and-shoulders. A break above $38 provides a trading target of $46, but long-term investors could see much higher returns.

MCHP Chart
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Chart Key

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