With news that Apple Inc (AAPL) is planning a 30% production cut for its iPhone 6, even the most committed Apple lovers seem to be feeling the “seven-year itch.”
What does that mean for us?
Bearish opportunities in semiconductors.
Many of those stocks have already tanked — such as Apple supplier Skyworks Solutions Inc (SWKS), down 12.6% in the last week and 21% in the last month. But the chartwork suggests that several others still have a long ways to fall.
Here are three such semiconductor stocks for which the Profit Scanner powered by Recognia sees significant downside ahead.
Semiconductor Stocks to Sell: Rambus Inc. (RMBS)
First up is Rambus Inc. (RMBS), which is best known for its memory chips for mobile devices. On Jan. 7, RMBS had two intermediate-term bearish signals: a cross below its 50-day moving average and a Double Top.
The dreaded Double Top is one of the most common — and instantly recognizable — bearish chart patterns. In the RMBS chart, you can see the two characteristic peaks at roughly the same price ($12). Now that the stock has broken below $11.35, the lowest low between the two peaks, it indicates that RMBS has now reversed to a new downtrend.
Based on this pattern, the Profit Scanner is looking for RMBS to drop to between $10.30 and$10.50 in the next 21 trading days.
Rambus also had a near-term bearish signal on Jan. 7. Specifically, the four-day moving average crossed below the nine-DMA, which in turn crossed below the 18-DMA. This bearish Triple Moving Average Crossover doesn’t have a particular price target, but it lends support to a short-term bearish play.
Semiconductor Stocks to Sell: Marvell Technology Group Ltd. (MRVL)
Things aren’t looking too bright for Marvell Technology Group Ltd. (MRVL), either. Marvell, which focuses on the Ethernet, cable and DSL market, had three bearish signals in the last week.
First, on Jan. 6, came confirmation of a bearish Symmetrical Continuation Triangle. MRVL had been making a series of lower highs and higher lows as its range narrowed. Now that MRVL has broken below the lower trendline, the Profit Scanner expects the stock to reach $5.90 to $6.30 as it continues its prior downtrend.
And on Jan. 7, Marvell’s short-term Know Sure Thing turned red, another indicator of bearish momentum. The same day, it also suffered a bearish Triple Moving Average Crossover (like RMBS) involving the four-, nine- and 18-DMAs. So, this might be a good time for traders to get involved on the short side.
Semiconductor Stocks to Sell: STMicroelectronics NV (ADR) (STM)
Last but not least is Apple supplier STMicroelectronics NV (ADR) (STM). Here, the bearish signal in question came on Jan. 5: a Descending Continuation Triangle.
This pattern consists of lower highs and constant lows, suggesting that sellers are more aggressive than buyers. That’s confirmed when the stock breaks below the lower trendline to continue its prior downtrend.
Now that STM has done just that, the Profit Scanner has a downside target of $4.80 to $5.10.
If that weren’t enough of a warning sign, STM also saw its short-term KST turn bearish on Jan. 7, along with a short-term bearish Triple Moving Average Crossover.
Profit Scanner powered by Recognia can help traders of all levels uncover these signals to determine the best timing to buy. Or use Profit Scanner’s technical insight to validate your own trading ideas. See how easy this powerful tool is to help you uncover hidden opportunities in the market.
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